U.S. consumer spending rises, boosted by jump in services

WASHINGTON — US consumer spending rose 0.4 percent in January as outlays on services recorded their largest increase since late 2011, likely driven by demand for heating.

US consumer spending’s 0.4 percent rise comes after an 0.1 percent revised rise in December.

January’s increase in spending was driven by a 0.9 percent jump in services, the biggest gain since October 2001.

With households depending more on utilities, outlays on goods fell 0.6 percent in January.

Inflation pressures remained muted.

A price index for consumer spending rose 0.1 percent after an increase of 0.2 percent in December. Over the past year, prices have risen 1.2 percent.

Excluding food and energy, the price index for consumer spending increased a slight 0.1 percent, following a trend over the last seven months. Core prices were up 1.1 percent from a year ago.

Both inflation measures remain below the Federal Reserve’s 2 percent target.

Consumer spending rose 0.3 percent after falling 0.1 percent in December. This rise could boost first-quarter gross domestic product.

Income rose 0.3 percent in January after being flat the prior month. The expiration of jobless benefits for more than one million long-term unemployed at the end of December curbed income growth.

Income at the disposal of households after adjusting for inflation rose 0.3 percent in January after falling 0.2 percent the previous month.

The percentage of disposable income households was unchanged at 4.3 percent in January. However, actual saving fell to its lowest level since March.

Source: Reuters

 

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