Official figures show that US consumer spending rose at the strongest pace in four months in July, supported by a small gain in incomes.
The Commerce Department said spending increased 0.4% from June, the largest gain since March, after being unchanged in June. Analysts had expected consumer spending to rise 0.3%.
The income and spending report was a relief after a flurry of weak data for July which had fuelled fears that economic growth might continue to slow during in the third quarter.
Consumer spending, which normally accounts for 70% of US economic activity, is being dampened by stubbornly high unemployment.
The Commerce Department said spending adjusted for inflation increased 0.2% last month after edging up 0.1% in June. Real spending on goods rebounded 0.4%, while spending on services increased 0.2%.
Personal income increased 0.2% last month after being unchanged in June. Markets had expected income to rise 0.3 percent in July. Wages and salaries rose at a $22 billion annual rate during July after shrinking at an $8 billion rate in June. But real disposable income fell 0.1%, the first decline since January, following June's 0.1% gain.
The savings rate slipped to 5.9% from 6.2% the previous month. Inflation did not appear to be a problem. The report showed the personal consumption expenditures price index, excluding food and energy, was up 1.4% in the 12 months to July, unchanged from June. The index is a key inflation measure monitored by the Federal Reserve.
