US consumers continue to spend

By James Quinn, US Business Editor Published: 7:40PM GMT 01 March 2010

Personal spending rose by 0.5pc in the initial month of 2010, the fourth uninterrupted monthly rise. But that spending surge was fuelled by borrowing and dipping in to savings, as personal income rose by only 0.1pc in January, with the saving rate rising by 3.3pc, opposite 4.2pc a month earlier.

Although the design presents a renewed certainty between consumers, it additionally highlights concerns that certainty might be being fuelled by a climb in borrowing.

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"The subject of where consumers are going to get the money indispensable to grow their spending and put their monetary houses in sequence was again brought to the forefront by the majority new income and spending data," remarkable Scott Hoyt, comparison executive of consumer economics for Moody"s Economy.com.

However, consumers might be benefiting from calm prices giving shoppers somewhat additional crash for their sire - as the Federal Reserve"s core cost index for personal expenditures that strips out food and fuel - rose 1.4pc in January, down from 1.5pc in Dec 2009.

Meanwhile the economy"s manufacturing-led liberation appears to go on apace, with the industry recording the seventh month of enlargement in a row in January.

The Institute for Supply Management (ISM) index fell to 56.5 in Feb on top of the 50-mark signals enlargement down from January"s 58.4 reading, that was the top in five-and-a-half years.

"The Feb combination celebration of the mass is still unchanging with GDP gains nearby 4.75pc, and prolongation production should show gains for the year, moderating from a "snap behind pace" following last year"s collapse," pronounced Citigroup economist Steven Wieting.