There was growth in personal income, which helped fuel stronger consumer spending during the month
American consumers spent more in August, a positive sign for the US economy which appears to have shifted into a higher gear.
The Commerce Department has said consumer spending rose 0.5% last month after being unchanged in July.
The growth in August was just above the median forecast in a Reuters poll of a 0.4% gain.
“(The data) is a further signal that the positive momentum in domestic activity is being sustained,” said Millan Mulraine, an economist at TD Securities in New York.
Even after adjusting for inflation, spending was 0.5% higher, the biggest gain since March.
Growth in personal income ticked higher to a 0.3% gain, in line with forecasts. Some of the strength in spending came from a decrease in the saving rate, which eased back from a 1-1/2-year high in July.
The data reinforces the view that the US economy will finish this year firing on nearly all cylinders, and the dollar pared an earlier decline following the report’s publication.
Most investors are betting the US Federal Reserve could raise interest rates next year to keep inflation in check, though today’s data gave little sign of growing price pressures.
The Fed’s preferred gauge of inflation was up 1.5% in August from a year earlier, down slightly from the reading in July, the Commerce Department data showed.
A measure of underlying price pressures which strips out food and energy held at 1.5%. That reading had dipped to 1.2% earlier this year.
Some policymakers at the US central bank remain concerned that inflation remains stuck well below their 2% target.
Chicago Fed President Charles Evans said on CNBC television that the Fed should patiently seek to push inflation up to its target so it does not have to “backtrack” after raising rates.
Data on Friday showed the US economy grew at its fastest pace in 2-1/2 years in the second quarter with all sectors contributing to the jump in output.
Relatively strong consumer spending during the period was taken as a sign the economy’s recovery from the 2007-09 recession is becoming more durable.