US consumer spending rose as expected in February for a fifth straight month, while stagnant incomes pushed savings to their lowest level since October 2008, a government report showed today.
The Commerce Department said spending increased 0.3 per cent after rising by a slightly downwardly revised 0.4 per cent in January. Consumer spending in January was previously reported to have increased 0.5 per cent.
Analysts polled by Reuters had expected consumer spending, which normally accounts for over two-thirds of US economic activity, to increase 0.3 per cent last month.
US financial markets moved little on the data.
"I guess the big takeaway is that consumers are comfortably consuming again. We have positive numbers five months in a row since October, which I guess is a good sign," said Chris Low, chief economist at FTN Financial in New York.
Spending has been rising steadily despite sluggish income growth as the economy battles high unemployment. Analysts reckon rising share prices could be behind the gains in spending, which have seen consumers buying more big ticket items even though they are not purchasing houses.
Consumer spending rose at a modest 1.6 per cent annual rate in the fourth quarter, slowing from 2.8 per cent in the prior period, according to a government report on Friday.
Spending adjusted for inflation rose 0.3 per cent last month, adding to a 0.2 per cent increase in January.
Personal income was flat following January's 0.3 per cent rise, where markets had expected incomes to edge up 0.1 per cent.
Payrolls of goods-producing industries fell $3.5 billion in February after increasing $5.2 billion, while manufacturing slipped $1.4 billion following a $5.0 billion gain.
This probably reflected the winter storms that struck parts of the country and kept some hourly paid workers at home.
Real disposable income was flat last month after falling 0.4 per cent in January. With no income growth, savings fell to an annual rate of $340 billion, the lowest level since October 2008. The saving rate slipped to 3.1 per cent, also the smallest rate since October 2008, from 3.4 per cent the prior month.
The data also showed the personal consumption expenditures price index, excluding food and energy, rising 1.3 per cent in the 12 months to February. The index, which is a key inflation gauge monitored by the US Federal Reserve, increased 1.5 per cent in January.
Reuters