- Consumer spending increases 0.6% in September
- Core PCE price index rises 0.5%; up 5.1% year-on-year
- Employment cost index increases 1.2% in third quarter
- Private sector wages rise 1.2%; up 5.2% year-on-year
U.S. consumer spending rose more than expected in September while underlying inflation pressures continued to bubble, keeping the Federal Reserve on track to hike interest rates by three-quarters of a percentage point next week.
But there was some encouraging news in the fight against stubbornly high inflation, with other data from the Labor Department on Friday showing private industry wage growth slowed considerably in the third quarter.
“Americans may say they are worried about inflation, but they are still out shopping which keeps the economy growing for another quarter,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “There can be no chance that inflation pressures will subside in the near term from slowing demand.”
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.6% last month, the Commerce Department said. Data for August was revised higher to show spending increasing 0.6% instead of 0.4% as previously reported.
Economists polled by Reuters had forecast consumer spending would gain 0.4%. Consumers stepped up purchases of motor vehicles and spent more on food, clothing, prescription medication and recreational goods. There were also increases in outlays on services, driven by housing and utilities as well as travel and dining at restaurants.
The data was included in Thursday’s advance third-quarter gross domestic product report, which showed economic growth rebounding after contracting in the first half of the year.
Last quarter’s 2.6% annualized growth pace was largely driven by a sharp narrowing in the trade deficit.
U.S. consumer spending rises strongly; wage growth moderating | Reuters