US household spending jumped 1.3% in August, driven by car sales helped by the 'cash for clunkers' incentives, government data showed today.
The rise in spending came as incomes rose 0.2% in the month, according to data from the Commerce Department.
The pickup in spending reflected the 'clunkers' programme that offered government incentives to trade in old vehicles for newer, more fuel-efficient models.
Sales of durable goods, which include cars and appliances, rose a hefty 5.8% in the month.
Purchases of motor vehicles and parts 'accounted for most of the August increase in purchases of durable goods,' the Commerce Department said. Analysts had expected a 1.1% gain in personal spending and a 0.1% rise in incomes.
Personal saving as a percentage of disposable personal income was 3% in August, compared with 4% in July. It marked a third drop in a row, suggesting consumers are slowly beginning to spend more after a recession-inspired retrenchment.
US PMI grows but at weaker than expected pace
Meanwhile, the US manufacturing sector grew for the second consecutive month in September but at a weaker pace than expected by most analysts, the Institute of Supply Management said today.
The institute said its index of the factory sector, also known as the purchasing managers index, fell to 52.6% from 52.9% in August. Any number above 50 indicates growth. The figure was lower than the average economist estimate of 54%.
Although the manufacturing sector grew for the second month in a row, 'the rate of growth moderated slightly when compared to August,' said Norbert Ore, chairman of the Institute for Supply Management manufacturing business survey committee.
He said the recovery broadened as the number of industries reporting growth increased from 11 to 13. Both new orders and production grew, but at a slower rate when compared to August.
