UNITED States consumer spending climbed more than forecast in July as Americans dipped into savings to buy cars and cool their homes, showing the biggest part of the economy is holding up.
Purchases rose 0.8 percent, the biggest gain since February, after a 0.1 percent decline the prior month, Commerce Department figures showed yesterday in Washington. The median estimate of 74 economists surveyed by Bloomberg News called for a 0.5 percent increase. Incomes grew 0.3 percent, pushing the savings rate to a four-month low.
Industry data showed autos sold at the fastest pace in three months as supply constraints from Japan's March earthquake began to ease, while outlays on services, which include utilities like electricity and gas, climbed at the fastest pace since December 2009. Falling energy prices may provide further ballast for spending in the second half of the year, helping the economy emerge from its current weak spot.
"It'll be a softer quarter for inflation and therefore a stronger quarter for real consumer spending," Dean Maki, chief US economist at Barclays Capital Inc in New York, said before the report. "Labor income growth is holding up reasonably well. Consumer spending will be firmer in the second half."
Projections for spending in the Bloomberg News survey ranged from hikes of 0.2 percent to 0.8 percent. The department revised the June spending figure from a previously reported 0.2 percent decline.
The gain in incomes in July followed a 0.2 percent increase the prior month that was larger than previously reported. The July hike matched the median forecast of economists surveyed.
Wages and salaries rose 0.4 percent in July after a 0.1 percent increase a month earlier.
Because incomes rose less than spending, the savings rate fell to 5 percent, the lowest level since March, from 5.5 percent in June.
Cars and light trucks sold at a seasonally adjusted pace of 12.2 million units in July, up from 11.4 million units in June, according to industry data. The rate trails the 12.6 million average pace through the first half of the year, according to Autodata Corp. Deliveries at Detroit-based General Motors Co climbed 7.6 percent from the same month in 2010.
Retailers, including Macy's Inc and Limited Brands Inc, posted July sales that beat analysts' estimates. Purchases at Macy's rose 5 percent, surpassing the 4.4 percent average projection compiled by Retail Metrics Inc. Limited, operator of the Victoria's Secret chain, posted a gain of 6 percent from a year earlier.
The report also showed inflation accelerated from a year ago. The gauge tied to consumer spending patterns rose 2.8 percent from July 2010, following a 2.8 percent gain in the 12 months ended in June.
2011-8-30
Source:Bloomberg News