US consumer spending up, unemployment benefits down
U.S. consumers spent more in May as their income increased at the fastest pace in three months, gains that could help economic growth rebound.
The Commerce Department says consumer spending rose 0.3 percent last month. That made up a 0.3 percent decline in April, which was the biggest drop since the fall of 2009. The rise in spending was due in part to a 0.9 percent increase in purchases of durable goods such as autos.
Income rose 0.5 percent in May, the biggest gain since February and much better than the 0.1 percent April increase. Even with the gain, after-tax income is up just 1.1 percent over the past year after taking inflation into account.
Consumer spending is important because it drives 70 percent of economic activity.
Meanwhile, the number of Americans seeking unemployment benefits fell 9,000 to a seasonally adjusted 346,000 last week, evidence that the job market is still improving modestly, despite signs of slower growth.
The Labor Department says the four-week average, a less volatile figure, declined 2,750 to 345,750. That's near the five-year low of 338,000 that the average touched last month.
Applications are a proxy for layoffs. Since March, they have fluctuated between 340,000 and 360,000, a level consistent with steady hiring. Employers added 175,000 jobs in May, almost matching the average monthly gain for the past year.
Steady job gains could help the economy expand later this year. Growth was only 1.8 percent at an annual rate in the first quarter, the government said Wednesday, down from a previous estimate of 2.4 percent.
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