U.S. March personal incomes rise, consumers save more

WASHINGTON, Mon Apr 30, 2012 – U.S. household income rose in March by the most in three months but consumers socked away part of the extra cash and only modestly increased spending, suggesting economic growth ended the first quarter on a soft note.

The Commerce Department said on Monday consumer income rose 0.4 percent last month. Analysts had expected a gain of 0.3 percent. After-tax income climbed 0.2 percent in March when accounting for higher prices.

Consumer spending rose 0.3 percent last month, also just below the median forecast in a Reuters poll of 0.4 percent.

When taking into account inflation, which has been fed in recent months by higher gasoline prices, spending was up 0.1 percent.

“The spending number is an indication that the higher gas prices we saw last month are taking their toll,” said Todd Schoenberger, managing principal at the Black Bay Group in New York.

U.S. economic growth cooled in the first quarter as businesses cut back on investment and restocked shelves at a slower pace. The economy grew at an annualized pace of 2.2 percent in the first three months of the year, data on Friday showed, a slowdown from the fourth quarter’s 3.0 percent rate.

Stronger consumer spending over the entire quarter cushioned the blow, but Monday’s data suggested consumers ended the quarter spending less freely.

With consumption rising less quickly than income, the saving rate edged higher to 3.8 percent.

Prices for U.S. government debt held steady at higher levels, while U.S. stock index futures were slightly lo

Consumer, business spending point to slower growth

WASHINGTON ― U.S. consumer spending was tepid in November and a gauge of business investment plans fell for a second month, pointing to some loss of momentum in the economy as the year ends.

The Commerce Department said on Friday consumer spending ticked up 0.1 percent after rising by the same margin in October. Economists had expected spending, which accounts for two-thirds of U.S. economic activity, to rise 0.3 percent.

In another report, the department said non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, fell 1.2 percent last month after declining 0.9 percent in October.

While the reports suggest some slowing in activity, they are unlikely to change perceptions that economic growth will top 3 percent in the current quarter after a 1.8 percent pace in July-September, boosted in part by a rebound in inventories.

U.S. stock index futures pared gains on the data, while prices for U.S. government debt trimmed losses. The dollar fell against the euro.

The tepid consumer spending is in stark contrast with robust Black Friday business reported by retailers.

When adjusted for inflation, spending rose 0.2 percent last month after a similar gain in October. The government on Thursday revised down third-quarter consumer spending growth to a 1.7 percent annual pace from 2.3 percent because of a slump in spending at hospitals.

Income ticked up 0.1 percent last month, the weakest reading since August, after increasing 0.4 percent in October. Last month’s increase was below economists’ expectations for a 0.2 percent rise.

Taking inflation into account, disposable income was flat after rising 0.3 percent in October.

“The lack of real income growth really raises questions as to what is going to happen to the economy in the first quarter,” said Mark Vitner, senior economist at Wells Fargo Securities in Charlotte, N.C.

New orders for durable goods unexpectedly rise in October

WASHINGTON ― New orders for a range of long-lasting U.S. manufactured goods unexpectedly rose in October, but sharp downward revisions to the prior month’s data and weak spending plans by businesses suggested manufacturing was taking a breather.

The Commerce Department said on Wednesday durable goods orders excluding transportation rose 0.7 percent after a downwardly revised 0.6 percent increase in September. Economists had forecast this category unchanged from the previously reported 1.8 percent rise.

But weak demand for transportation equipment saw overall orders falling 0.7 percent after declining 1.5 percent in September. Economists had forecast overall orders dropping 1.0 percent last month.

Durable goods range from toasters to big-ticket items such as aircraft which are meant to last three years and more.

Overall orders were dragged down by a 4.8 percent drop in bookings for transportation equipment as orders for civilian aircraft dropped 16.4 percent last month. Boeing received only 7 orders for aircraft, according to the plane maker’s website, down from 59 in September.

That overshadowed a 6.2 percent increase in orders for motor vehicles.

Despite the rise in orders excluding transportation, the tenor of the report was weakened by a drop in non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending. The category fell 1.8 percent last month after a downwardly revised 0.9 percent rise in September.

It was the largest decline since January, when it fell 4.8 percent.

Economists had expected a drop of 0.6 percent from the previously reported 2.9 percent jump.

This category normally weakens in the first month of each quarter in part because of an incomplete seasonal adjustment of the power equipment subcomponent.

Shipments of non-defense capital goods orders excluding aircraft, which go into the calculation of gross domestic product, fell 1.1 percent after declining 1.0 percent in September.