Consumer spending in the U.S. during September has recorded its smallest increase in the past eight months as personal income hardly rose, which suggested some cooling in demand domestically after hefty increases of recent.
The U.S. Commerce Department information and one other report from the Department of Labor on Friday showed that inflationary pressures were weak, which would argue against a raising of interest by the Federal Reserve at the end of this year.
This week, the U.S. policymakers at the Fed put a hike in the rate on the table with a reference to their last meeting of 2015. The Fed has maintained its benchmark rate close to zero since the end of 2008.
Consumer spending represents over two-thirds of the economic activity in the U.S. and edged higher by 0.1% during September after moving up 0.4% in August.
The consumer spending data in September was included in the third quarter report on gross domestic product released on Thursday.
Consumer spending increased 3.25% on an annualized basis during the just ended third quarter, which helped to lift the growth in the GDP to over 1.5%. Spending increased at over a 3% rate in both the past two quarters.
Growth during the just ended quarter was weighed down by efforts by business to whittle down their bloated inventories, a strong U.S. dollar and the ongoing cuts in spending by the countries energy companies.
When adjusted to include inflation, consumer spending increased 0.2% during September, after 0.4% during August, which suggests that consumption would continue to support the U.S. economy through the remainder of this year.
Personal income moved up 0.1% during September, the smallest rate of increase since this past March after it increased 0.4% the previous month. While spending remained, sluggish inflation remained benign during the months.
The consumer spending price index slipped by 0.1% the first drop since January of this year after it had been flat during August. In the past 12 months through the end of September personal consumption expenditures price index was up 0.2% its smallest spike since this past April.