Personal spending in the U.S. increased by slightly more than expected in the month of June, according to a report released by the Commerce Department on Tuesday, although the report also said personal income rose by a little less than expected.
The report said personal spending climbed by 0.4 percent in June, matching the increase seen in May. Spending had been expected to rise by about 0.3 percent.
Real spending, which is adjusted to remove price changes, rose by 0.3 percent in June after ticking up by a revised 0.2 percent in May.
Steve Murphy, U.S. economist at Capital Economics, said the increase in real spending suggests that consumption growth remained healthy heading into the third quarter.
Meanwhile, the Commerce Department said personal income edged up by 0.2 percent for the second straight month. Economists had expected income to increase by 0.3 percent.
Disposable personal income, or personal income less personal current taxes, also crept up by 0.2 percent for the second consecutive month.
With spending rising faster than income, personal saving as a percentage of disposable personal income fell to 5.3 percent in June from 5.5 percent in May.
The Commerce Department also said its personal consumption expenditures price index inched up by 0.1 percent in June after rising by 0.2 percent in May. The annual rate of growth was unchanged at 0.9 percent.
Core PCE prices, which exclude food and energy prices, also ticked up by 0.1 percent after edging up by 0.2 percent for two consecutive months. The annual rate of growth remained at 1.6 percent for the fourth straight month.
"Adding to the disappointing second-quarter GDP data, the lack of a clear pick-up in inflation will allow the Fed to delay the next rate hike until it has seen more concrete signs of a rebound in GDP growth, which all but rules out a September rate hike," Murphy said.
A separate Commerce Department report released last Friday said GDP rose by 1.2 percent in the second quarter compared to economist estimates for a 2.6 percent increase.
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