U.S. consumer spending rose in July at the strongest pace in four months. It was supported by a small gain in incomes and offers hope that consumers may be able to keep contributing to a modest economic recovery.
Analysts say the 0.4 percent increase in spending, reported by the Commerce Department, was a relief after a raft of weak data for July. They also say it will help ease fears the economy is sliding back into a recession.
Wages and salaries rose at a 22 billion US dollar annual rate last month, helping fuel the rise in incomes. But real disposable income fell 0.1 percent, the first decline since January. Although the savings rate slipped to 5.9 percent from 6.2 percent the previous month, analysts said this level still indicates that consumers remain wary.