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U.S. Personal Spending Shows Biggest Increase In Almost Six Years

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Personal spending in the U.S. rose by more than expected in the month of May, the Commerce Department revealed in a report on Thursday, with spending seeing its strongest growth in nearly six years.

The Commerce Department said personal spending jumped by 0.9 percent in May following a revised 0.1 percent uptick in April.

Spending had been expected to increase by 0.7 percent after originally being reported as nearly flat in the previous month.

The stronger than expected spending growth reflected the largest increase since a 1.0 percent jump in spending in August of 2009.

Real spending, which is adjusted to remove price changes, also climbed 0.6 percent in May after coming in nearly unchanged in April.

The sharp increase in spending came amid continued growth in personal income, which rose by 0.5 percent in May, matching the upwardly revised increase seen in April.

Economists had expected income to rise by 0.4 percent, which would have matched the growth originally reported for the previous month.

Disposable personal income, or personal income less personal current taxes, also climbed 0.5 percent in May following a 0.4 percent increase in April.

With the jump in spending, personal saving as a percentage of disposable personal income tumbled to 5.1 percent in May from 5.4 percent in April.

"We are finally seeing signs of consumers beginning to spend the gasoline savings they have been sitting on since the start of this year," said Paul Ashworth, Chief U.S. Economist at Capital Economics. "Moreover, spending is also being driven by a rapidly improving labor market."

The Commerce Department said its personal consumption expenditures price index rose by 0.3 percent in May after coming in unchanged in April. The annual rate of growth held at 0.2 percent.

Core PCE prices, which exclude food and energy prices, edged up by 0.1 percent for the second straight month and were up 1.2 percent year-over-year.

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