Consumer spending in the United States rose more than expected in April, boosting the economy’s growth outlook in the second quarter, and inflation has picked up, which could prompt the Federal Reserve to raise its limits again. interest rate next month.
The growth picture was supplemented on Friday with more data from the Commerce Department, showing that non-defence manufacturing orders rose unexpectedly in April, excluding aircraft.
The reports paint a picture of the resilience of the labor market, the recovery of industrial production and business growth, suggesting that the economy is enjoying a spring recovery after some slowdown in the first quarter.
Consumer spending rose 0.8% last month. March data has been revised up to show spending rose 0.1% instead of flat as previously reported. Economists polled by Reuters had forecast consumer spending, which accounts for more than two-thirds of US economic activity, to rise 0.4%.
Consumers have increased their purchases of new light trucks and are spending more on pharmaceuticals. Spending on goods rose 1.1% after two consecutive monthly declines.
Spending on services rose 0.7%, driven by growth in financial services and insurance, as well as health care, recreation and utilities.
A surge in consumer spending last month dampened economists’ expectations of a sharp slowdown this quarter.
Consumer spending is supported by strong wage growth in a competitive labor market. Wages rose 0.5% after rising 0.3% in March. This helped push personal income up 0.4% after rising 0.3% in March. Growth estimates for the second quarter are currently 2.9% year-over-year. The economy grew 1.3% in the first quarter.
The consumer price index (PCE) rose 0.4% in April after rising 0.1% in March. In the 12 months to April, the PCE price index rose 4.4% after rising 4.2% in March. Excluding the volatile food and energy components, the PCE price index rose 0.4% after rising 0.3% in March.
Another report released by the US Commerce Department on Friday showed orders for non-military manufactured goods, excluding aircraft, rose 1.4% last month after falling 0.6% in March, surprising economists who expected a further decline of 0.2%.
Manufactured goods statistics are used to calculate capital expenditures when measuring a country’s gross domestic product.
A rebound in orders and shipments last month prompted cautious optimism that business spending on equipment will rebound this quarter after a steady decline in 2020.
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