US consumer spending jumped 0.9% in March, the largest increase in nearly five years, adding to evidence the economy was rebounding from a deep winter freeze, official data showed today.
US consumers opened their wallets to buy a broad range of goods and services in March.
Consumption of durable goods soared 2.7%, with purchases of cars and trucks accounting for more than half of the increase.
In March, consumer spending, which accounts for two-thirds of US economic activity, saw the fastest pace of growth since August 2009, much stronger than analysts expected. The average estimate was for a 0.6% gain.
The February increase in personal consumption expenditures was also revised up to 0.5% from the previous reading of 0.3%. Personal income increased 0.5% in March after rising by 0.4% in February.
Wages and salaries, the largest component of personal income, increased 0.6% after growing by 0.3% the previous month.
US inflation remained tame, the figures show. The PCE price index increased 0.2% in March after increasing 0.1% in February. Excluding food and energy, core PCE prices rose 0.2% in March.
Meanwhile, new claims for US unemployment insurance benefits rose last week but remained on a downward trend as the job market slowly improves, government data released today showed.
Initial jobless claims, a sign of the pace of layoffs, totaled 344,000 in the week ending April 26, an increase of 14,000 from the prior week's slightly revised 330,000 reading, the Labor Department said.
Claims last week were at their highest level since late February.
Most analysts expected claims to fall to 315,000. But they cautioned that weekly volatility was particularly difficult to assess because of the Easter holiday and school break periods.
The four-week moving claims average, which helps to smooth out volatility, rose by 3,000 to 320,000. A year ago the four-week average was at 344,000.
The claims data came ahead of Friday's April jobs report. The Labor Department is expected to announce 210,000 jobs were added to the economy, after 192,000 in March, and the unemployment rate slipped to 6.6% from 6.7%.