US consumer spending was flat in June as incomes remained stagnant, amid slower economic growth and high unemployment.
The US Commerce Department said consumption expenditures fell by less than 0.1% compared with a similar percentage rise in May.
Disposal personal incomes - income after taxes have been paid - rose in June by a less than 0.1% from 0.3% the previous month.
Most economists had expected flat spending but incomes to rise 0.1%. Consumer spending is a key driver of US economic growth, usually accounting for two-thirds of output.
The US economy has been growing since mid-2009 after plunging into recession in December 2007, but the expansion pace has slowed with unemployment hovering around 9.5%.
Separate figures show that US factory orders slumped in June, providing further evidence that the manufacturing recovery is slowing.
New factory orders decreased for a second consecutive month, shrinking by over $5 billion, or 1.2%, the Commerce Department said.
Factory orders had only been expected to dip by around 0.5%. The worse than expected figure raised concerns about the fragile recovery.
Manufacturing had been a bright spot in the US economic rebound, as firms rapidly rebuilt inventories depleted during the depths of the recession. Goods sales had also been boosted by President Barack Obama's export drive and the stronger dollar.
But in recent months the rate of inventory build up has slowed and the dollar has lost ground to the euro, making exports to Europe more expensive.
Pending home sales down to nine-year low
The number of contracts signed to purchase existing homes in the US unexpectedly fell in June to its lowest level in nine years, private data showed today.
The National Association of Realtors said its pending home sales index declined 2.6% to 75.7 points based on contracts signed in June compared to the earlier month.
The index stands at its lowest level on records dating back to 2001 and was 18.6% lower compared to the same time last year.
The decrease followed May's sharp 30% decline on the expiry of a government homebuyer tax credit aimed at propping up the housing sector, which was at the epicentre of financial turmoil that plunged the economy into recession in December 2007.
Lower home sales are expected to continue in the short term amid relatively high inventory levels, said Lawrence Yun, NAR chief economist.
The economy, which started recovering since the middle of last year from the recession, is facing a growth slowdown as unemployment remains at a high 9.5%.
'There could be a couple of additional months of slow home-sales activity before picking up later in the year, provided the job market continues to improve,' he said.
He said home prices had come down to 'fundamentally justifiable levels' with some local markets continued to show strengthening prices. Yun also expected mortgage interest rates to remain historically low for the rest of the year with 'very modest growth' in employment.
