US consumer spending up
Household purchases, which account for almost 70 per cent of the economy, climbed 0.3 per cent after a 0.2 per cent gain in January that was smaller than previously estimated, Commerce Department figures showed on Sunday in Washington. The median forecast of 79 economists in a Bloomberg survey called for a 0.3 per cent gain. Incomes also increased 0.3 per cent.
Americans were shaking off the effects of the coldest winter in four years as they ventured out to shop, supported by a job market that's also picking up speed. Retailers from Gap to Macy's are among companies that are waiting on warmer weather to gain clarity on the spending outlook.
"The momentum is shifting higher," said Millan Mulraine, deputy head of US research and strategy at TD Securities USA in New York, who correctly forecast the gain in spending. "It's moving in the right direction, though we are starting from a lower base than otherwise would have been thought."
Projections for spending in the Bloomberg survey ranged from gains of 0.1 per cent to 0.6 per cent. The January reading was previously reported as an increase of 0.4 per cent.
The Bloomberg survey median called for incomes to rise 0.3 per cent.
Friday's report showed that after adjusting consumer spending for inflation, which generates the figures used to calculate gross domestic product, purchases increased 0.2 per cent, also the best performance since November, after a 0.1 per cent advance the previous month.
Spending on durable goods, including automobiles, increased 0.1 per cent after adjusting for inflation following a 0.4 per cent drop in January. Purchases of non-durable goods, which include gasoline, gained 0.3 per cent.
Household outlays on services climbed 0.2 per cent after adjusting for inflation. In addition to health care, the category also includes utilities, tourism, legal help and personal care items such as haircuts. This makes it typically difficult for the government to estimate accurately in the preliminary report. Friday's data also showed the core price measure, which excludes fuel and food, rose 0.1 per cent in February from the prior month and was up 1.1 per cent from a year ago, the same as in January.
Total prices, which are the ones tracked by Federal Reserve policy makers, also increased 0.1 last month and were up 0.9 per cent from February 2013, the smallest year-to-year gain since October. That remains well below the central bank's two per cent goal.
Fed officials are monitoring the recovery as they pursue plans to gradually dial back their bond-buying program, known as quantitative easing. The central bank reduced its monthly pace of bond purchases by $10 billion, to $55 billion, according to a March 19 statement.
"Growth in economic activity slowed during the winter months, in part reflecting adverse weather conditions," the Fed said in the statement. Even so, "there is sufficient underlying strength in the broader economy to support ongoing improvement in labormarket conditions."
Payrolls climbed by 175,000 in February after a 129,000 a month earlier, Labour Department data showed earlier this month. The jobless rate rose to 6.7 per cent from 6.6 per cent, a five- year low, as more people entered the labor force and couldn't find work.