US consumer spending beats forecast with hike in demand for heating
US consumer spending rose more than expected in January as outlays on services recorded their largest increase since late 2001, likely driven by demand for heating.
The Commerce Department said yesterday that consumer spending rose 0.4pc last month after advancing by a revised 0.1pc in December. Spending was previously reported to have gained 0.4pc in December.
Economists polled by Reuters had forecast consumer spending, which accounts for more than two-thirds of US economic activity, to rise by 0.1pc in January.
January's increase in spending was driven by a 0.9pc jump in services, the biggest gain since October 2001.
That probably reflected an increase in demand for utilities as Americans tried to keep warm during an unusually cold spell.
With households spending more on utilities, outlays on goods fell 0.6pc in January.
Despite the services-driven rise in spending, inflation pressures remained muted.
A price index for consumer spending rose 0.1pc after increasing 0.2pc in December.
Over the past 12 months, prices rose 1.2pc, compared to an advance of 1.1 pc in December.
Excluding food and energy, the price index for consumer spending edged up 0.1pc, rising by the same margin for a seventh straight month.
Core prices were up 1.1pc from a year ago, after rising 1.2pc in December.
Both inflation measures remain stuck below the Federal Reserve's 2pc target.
When adjusted for inflation, consumer spending rose 0.3pc after falling 0.1pc in December. The rise in so-called real spending could boost first-quarter gross domestic product.