US consumer spending edges higher in June

(MENAFN- AFP) US consumer spending edged higher in June, capping a rebound in the second quarter from weak growth in the first months of the year, the Commerce Department reported Monday.

Consumer spending, which accounts for about 70 percent of US economic activity, rose 0.2 percent in June after a 0.7 percent gain in May and a 0.3 percent increase in April, the department said.

For the April-June quarter, spending increased at an annual rate of 2.9 percent, up from a 1.8 percent pace in the first quarter. The improvement was led by a 4.8 percent jump in goods purchases. Growth in spending on services, the sector that generates the most US jobs, was unchanged at 2.1 percent for the second consecutive quarter.

Personal income rose 0.4 percent for the third month in a row in June. Real disposable income picked up slightly, to 0.5 percent growth following two months of 0.4 percent.

Inflation remained tepid. The Federal Reserve's preferred inflation measure, the personal consumption expenditures price index rose 0.3 percent year-over-year in June, accelerating slightly from May.

Excluding food and energy, which can be volatile, so-called "core" PCE prices rose 1.3 percent for the sixth consecutive month, still well below the Fed's 2.0 percent target for price stability.

"Spending had a good Q2, even with some slowing in June," said Jim O'Sullivan, chief US economist at High Frequency Economics. "The trend in core PCE prices remains tame -- with no clear acceleration or deceleration."