Auto sales crimp US con­sumer spend­ing; in­fla­tion muted

The Pak Banker - - BUSINESS -

NEW YORK: U.S. con­sumer spend­ing in June ad­vanced at its slow­est pace in fourth months as de­mand for au­to­mo­biles soft­ened, sug­gest­ing the econ­omy lost some mo­men­tum at the end of the sec­ond quar­ter.

But the mod­er­a­tion in con­sumer spend­ing could be tem­po­rary as Fiat Chrysler Au­to­mo­biles and Nissan Mo­tor Co Ltd said on Mon­day their U.S. July sales out­stripped ex­pec­ta­tions on the strength of sport util­ity ve­hi­cles sales. Con­sumer spend­ing rose 0.2 per­cent af­ter a down­wardly re­vised 0.7 per­cent in­crease in May, the Com­merce Depart­ment said. Con­sumer spend­ing, which ac­counts for more than two-thirds of U.S. eco­nomic ac­tiv­ity, was pre­vi­ously re­ported to have ad­vanced 0.9 per­cent in May.

June's in­crease was in line with econ­o­mists' ex­pec­ta­tions and the data was in­cluded in last week's sec­ond-quar­ter gross do­mes­tic prod­uct re­port, which showed con­sumer spend­ing ex­pand­ing at a 2.9 per­cent an­nual rate and the over­all econ­omy grow­ing at a 2.3 per­cent pace. While the tepid con­sumer spend­ing sug­gests less vigor in the econ­omy head­ing into the third quar­ter, any slow­down is likely to be mit­i­gated by a strength­en­ing hous­ing sec­tor and tight­en­ing la­bor mar­ket, which are boost­ing house­hold wealth.

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