WASHINGTON – U.S. consumer spending (search) rose an unexpectedly strong 0.6 percent in March on buoyant durable goods (search) purchases while the Federal Reserve's (search) favored inflation gauge also ticked higher, government data showed Friday.
The Commerce Department (search) revised up February spending sharply to a 0.7 percent gain from its first-reported 0.3 percent rise. A Reuters poll of analysts had expected consumer outlays to rise 0.4 percent in March.
The PCE price index (search), one of the Fed's favorite measures of inflationary pressures, rose 0.5 percent in March after climbing 0.3 percent in February, a move that may fan growing worries about price pressures in the U.S. economy.
Stripping out volatile food and energy prices, the core PCE index rose 0.3 percent, matching Wall Street expectations and topping its 0.2 percent February gain.
Year over year, the price index for personal consumption was up 2.4 percent versus an increase of 2.2 percent in February.
Personal income exceeded forecasts with an increase of 0.5 percent in March. Analysts polled by Reuters had expected income to advance 0.4 percent on the month. When adjusted for inflation and taxes, personal income was flat.
Purchases of durable goods — costly items meant to last three years or more — rose 2.2 percent in March and accounted for the bulk of the pickup in consumer spending.
Outlays on nondurable goods were unchanged in March while services consumption rose 0.6 percent.
The U.S. personal saving rate was 0.4 percent in March. The rate was down from 0.5 percent in February, and was the weakest reading since October 2001.
Get all the stories you need-to-know from the most powerful name in news delivered first thing every morning to your inbox