WASHINGTON (Reuters) — United States consumer spending rose less than expected in November as tepid income growth put a squeeze on households, according to a government report on Friday that suggested slowing momentum in demand. þþA separate report showed that new orders for manufactured goods soared in November on strong demand for aircraft, but a gauge of business spending plans fell for a second month, suggesting a cooling in investment. þþThe Commerce Department said consumer spending ticked up 0.1 percent after rising by the same margin in October. þþEconomists polled by Reuters had expected spending, which accounts for two-thirds of the nation’s economic activity, to rise 0.3 percent last month. þþWhen 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. þþNovember’s anemic consumer spending is unlikely to change views that economic growth in the fourth quarter could top a 3 percent pace, accelerating from the July-September period’s 1.8 percent rate. þþIncome 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. þþTaking inflation into account, disposable income was flat after rising 0.3 percent in October. þþThe saving rate dipped to 3.5 percent last month from 3.6 percent in October. Savings slowed to annual rate of $400.9 billion from $419.1 billion the prior month. þþThe report showed subsiding inflation pressures, which should help to support spending. þþA price index for personal spending was flat last month after falling 0.1 percent in October. In the 12 months through November, the PCE index was up 2.5 percent, the smallest rise since April. That followed a 2.7 percent increase in October. þþA core inflation measure, which strips out food and energy costs, edged up 0.1 percent last month after a similar gain in October. In the 12 months through November, core PCE rose 1.7 percent after increasing 1.7 percent in September. þþThe Federal Reserve would like this measure close to 2 percent. ( þþThe Commerce Department’s report on durable goods, meanwhile, showed that orders jumped 3.8 percent after being flat in October. Economists had forecast orders rising 2 percent from a previously reported 0.5 percent fall. þþDurable goods range from toasters to big-ticket items such as aircraft which are meant to last three years and more. þþExcluding transportation, orders rose 0.3 percent after rising 1.5 percent in October. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, fell 1.2 percent. þþThe category had dropped 0.9 percent in October. Economists’ had expected a 1.0 percent gain last month. þþBusiness spending, which has helped the economy to recover from the 2007-09 recession, is slowing, but analysts still expect corporations holding about $2 trillion in cash to continue investing in capital. þþOrders for durable goods last month were buoyed by a 14.7 percent increase in bookings for transportation equipment as orders for civilian aircraft surged 73.3 percent. þþBoeing received 96 orders for aircraft, according to the plane maker’s Web site, up from 7 in October. þþOrders for motor vehicles, however, fell 0.5 percent after rising 5.9 percent the prior month. þþOutside transportation, details of the report were mixed, with machinery orders rising, but demand for computers and related products falling. þþThe decline in orders for motor vehicles, computers and electrical equipment could be related to supply chain disruptions following flooding in Thailand. þþShipments of non-defense capital goods orders excluding aircraft, which go into the calculation of gross domestic product, fell 1.0 percent after declining 0.8 percent in October. þ
Source: NY Times
