US consumer spending rebounds

WASHINGTON: Consumer spending grew in July by 0.8 per cent, the largest amount in five months. That followed a decline in June and helped ease fears that the US economy is on the verge of another recession.

Personal incomes increased 0.3 per cent last month, the Commerce Department said. That's slightly higher than the modest 0.2 per cent in June, the weakest growth in seven months.

Economists said the report was a strong sign that the economy rebounded in July after growing at an annual rate of just 0.7 per cent in the first half of the year - the weakest pace since the recession officially ended two years ago.

Consumer spending is important because it accounts for 70 per cent of economic activity.

"July's spending and income figures significantly altered the outlook for third-quarter GDP growth," said Paul Dales, a senior US economist for Capital Economics.

The increase in spending was led by a 1.9 per cent jump in purchases of durable goods, products such as cars and appliances that are expected to last at least three years. Spending on non-durable goods rose 0.7 per cent. - AP