WASHINGTON - Consumer spending in the United States rose less than forecast in July as income growth slowed, indicating further job gains are needed to sustain household purchases.
Consumer purchases, which account for about 70 percent of the economy, rose 0.1 percent after a revised 0.6 percent increase the prior month that was larger than previously estimated, the Commerce Department reported Friday in Washington, D.C. The median forecast in a Bloomberg survey of economists called for a 0.3 percent rise. Incomes increased 0.1 percent, down from 0.3 percent the previous month.
A bigger pickup in job growth and wage gains are needed to help consumer spending overcome weak global demand. Rising mortgage rates threaten to derail the household purchases of appliances and automobiles that have supported home improvement retailers such as Lowe’s Cos. and Home Depot Inc.
“It’s difficult for consumers to increase their spending” as Americans face “concern about the stability of the labor market, whether they’re going to have their jobs” as well as the need to rebuild savings, said Gus Faucher, senior economist at PNC Financial Services Group Inc. in Pittsburgh, who correctly projected the rise in incomes. “There is some pent-up demand out there still.”
Stock-index futures pared earlier gains after the report. The contract on the Standard & Poor’s 500 Index maturing in September rose 0.1 percent to 1,638.50 at 8:32 a.m. in New York, after rising 0.5 percent earlier.
Projections on spending ranged from no change to a 0.5 percent increase in the Bloomberg survey of 74 economists. The June reading previously was reported as a gain of 0.5 percent. The survey median called for incomes to gain 0.2 percent.