Consumer spending up a weak 0.1 percent in October
WASHINGTON -- Consumer spending posted a modest increase for a second straight month in October, while personal income rebounded after a sluggish September.
Spending edged up 0.1 percent after a similar tiny gain in September, the Commerce Department reported Wednesday.
Incomes jumped 0.4 percent, double the rise in September. Wages and salaries climbed 0.6 percent. That was the strongest wage gain in five months and a reflection of the big surge in hiring that occurred last month.
The second straight month of spending weakness could signal trouble, given that consumer spending accounts for 70 percent of economic activity. However, economists are counting on the strong labor market to bolster the incomes needed to fuel spending in the months ahead.
In October, spending on durable goods such as cars was flat following a 0.5 percent rise in September. Spending on nondurable goods such as food and clothing edged up 0.1 percent following a big 1.1 percent drop the previous month that in part reflected falling gasoline prices.
Spending on services such as haircuts and auto repairs rose 0.1 percent after bigger gains of 0.4 percent in August and September.
With the growth in incomes and a small rise in spending, the saving rate rose to 5.6 percent of after-tax income in October, up from 5.3 percent in September. It was the highest monthly savings level in three years.
The strong gain in wages and salaries came in a month when employers added 271,000 jobs, the biggest monthly increase this year. The strong job growth pushed the unemployment rate down to a seven-year low of 5 percent.
Americans did boost online shopping and restaurant spending in October, but retail sales rose only 0.1 percent during the month. Part of that weakness reflected falling gasoline prices.
A separate report, also from the Commerce Department, had orders for long-lasting manufactured goods posting a solid gain in October after two months of weakness, while a key category that tracks business investment plans advanced by the largest amount in three months.
Orders for durable goods rose 3 percent in October following declines in both September and August. The strength was led by a surge in demand for commercial aircraft but reflected widespread gains in a number of categories, from machinery to computers. A key category that serves as a proxy for business investment spending rose 1.3 percent in October, the best showing since July.
American manufacturers have struggled this year with weakness in many key export markets and a strong dollar, which makes U.S. goods less competitive.
Reflecting the struggles manufacturers have faced this year, total orders for durable goods, items expected to last at least three years, were down 4.2 percent for the 10 months ending in October, compared to the same period a year ago.
For October, orders for commercial aircraft shot up 81 percent after a 32.2 percent plunge the previous month. Orders for autos and auto parts 2.9 percent in October.
Demand for machinery increased l.6 percent in October while orders for computers and related products rose 5.5 percent and demand for primary metals such as steel increased 0.4 percent.