WASHINGTON (Reuters) — Consumer spending in the United States rose less than expected in November as tepid income growth put a squeeze on households, according to a government report on Friday that suggested slowing momentum in demand.
A separate report showed that new orders for manufactured goods soared in November on strong demand for aircraft, but a gauge of business spending plans fell for a second month, suggesting a cooling in investment. The Commerce Department said consumer spending ticked up 0.1 percent after rising by the same margin in October.
Economists polled by Reuters had expected spending, which accounts for two-thirds of the nation’s economic activity, to rise 0.3 percent last month.
When adjusted for inflation, spending rose 0.2 percent last month after a similar gain in October. The government on Thursday revised downward third-quarter consumer spending growth to a 1.7 percent annual pace, from 2.3 percent, because of a slump in spending at hospitals.
November’s anemic consumer spending is unlikely to change views that economic growth in the fourth quarter could top a 3 percent pace, accelerating from the July-September period’s 1.8 percent rate.
Income ticked up 0.1 percent last month, the weakest reading since August, after increasing 0.4 percent in October. Last month’s increase was below economists’ expectations for a 0.2 percent rise.
Taking inflation into account, disposable income was flat after rising 0.3 percent in October.
The saving rate dipped to 3.5 percent last month from 3.6 percent in October. Savings slowed to an annual rate of $400.9 billion from $419.1 billion the prior month.
The report showed subsiding inflation pressures, which should help to support spending.
The Personal Consumption Expenditures index, a price index for personal spending, was flat last month after falling 0.1 percent in October. In the 12 months through November, the P.C.E. index was up 2.5 percent, the smallest rise since April. That followed a 2.7 percent increase in October.
A core inflation measure, which strips out food and energy costs, edged up 0.1 percent last month after a similar gain in October. In the 12 months through November, the core index rose 1.7 percent after increasing 1.7 percent in September.
The Federal Reserve would like this measure close to 2 percent.
The Commerce Department’s report on durable goods, meanwhile, showed that orders jumped 3.8 percent after being flat in October. Economists had forecast orders rising 2 percent from a previously reported 0.5 percent fall.
Durable goods range from toasters to big-ticket items, like aircraft, that are meant to last three years or more.
Excluding transportation, orders rose 0.3 percent after rising 1.5 percent in October. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, fell 1.2 percent.
The category had dropped 0.9 percent in October. Economists’ had expected a 1.0 percent gain last month.
Business spending, which has helped the economy to recover from the 2007-09 recession, is slowing, but analysts still expect corporations holding about $2 trillion in cash to continue investing in capital.
Orders for durable goods last month were buoyed by a 14.7 percent increase in bookings for transportation equipment, as orders for civilian aircraft surged 73.3 percent.
Boeing received 96 orders for aircraft, according to the plane maker’s Web site, up from 7 in October.
Orders for motor vehicles, however, fell 0.5 percent after rising 5.9 percent the prior month.
Outside transportation, details of the report were mixed, with machinery orders rising, but demand for computers and related products falling.
The decline in orders for motor vehicles, computers and electrical equipment could be related to supply chain disruptions following flooding in Thailand.
Shipments of nondefense capital goods orders excluding aircraft, which go into the calculation of gross domestic product, fell 1.0 percent after declining 0.8 percent in October.
Article source: http://feeds.nytimes.com/click.phdo?i=d9615702096ce9ec77bc01aa03f1e2a5
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