Con­sumer spend­ing bounced back in Septem­ber

Daily Local News (West Chester, PA) - - MARKETPLACE - By Martin Crutsinger AP Eco­nom­ics Writer

WASH­ING­TON >> Con­sumers boosted their spend­ing in Septem­ber at the fastest pace in three months, while their in­comes grew by a mod­est amount.

Con­sumer spend­ing in­creased 0.5 per­cent, a sig­nif­i­cant re­bound from Au­gust when spend­ing fell 0.1 per­cent, the Com­merce De­part­ment said Mon­day. The in­crease was led by a 1.3 per­cent surge in spend­ing on au­tos and other durable goods. In­comes in­creased 0.3 per­cent in Septem­ber, slightly faster than the 0.2 per­cent gain in Au­gust.

The over­all econ­omy grew at a 2.9 per­cent rate in the July-Septem­ber quar­ter, more than dou­ble the 1.4 per­cent in­crease in the sec­ond quar­ter. That ac­cel­er­a­tion in ac­tiv­ity came even though growth in con­sumer spend­ing slowed af­ter a burst in the spring. But the lat­est fig­ure in­di­cates that the quar­ter ended on a pos­i­tive note, with solid spend­ing mo­men­tum head­ing into the end of the year.

Jen­nifer Lee, se­nior econ­o­mist at BMO Cap­i­tal Mar­kets, said the re­port de­picted a “good hand­off” from the third quar­ter go­ing into the fourth quar­ter.

“More money com­ing in helped sup­port stronger spend­ing,” Lee said, not­ing that the rise in in­comes marked the seventh con­sec­u­tive in­crease.

The Septem­ber re­sult was the best show­ing since a sim­i­lar gain in June. While the quar­ter started well, spend­ing slowed to a 0.3 gain in July be­fore fall­ing by 0.1 per­cent in Au­gust. Econ­o­mists closely watch con­sumer spend­ing since it ac­counts for two-thirds of eco­nomic ac­tiv­ity.

In ad­di­tion to the big gain in spend­ing on durable goods, spend­ing on non-durable goods such as cloth­ing also showed a solid in­crease of 0.6 per­cent in Septem­ber.

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