CONSUMER SPENDING in the US probably picked up in October and factories took more machinery orders, showing that economic recovery strengthened entering the final quarter of 2010, economists have said.
Household purchases rose 0.5 per cent after a 0.2 per cent gain in September, according to a median estimate of 61 economists surveyed ahead of November 24th figures due from the commerce department.
The same day, another report from the agency may show bookings for durable goods, excluding cars and aircraft, climbed 0.6 per cent.
A better jobs market and bigger paypackets may give consumers the confidence to keep spending during the holiday season, broadening the economic rebound beyond manufacturing.
Minutes from the Federal Reserve’s meeting this month may help explain why policymakers decided to begin supplying the world’s largest economy with an additional $600 billion in monetary stimulus.
“As businesses invest more and hire more, it fuels consumer spending in what we hope becomes a self-sustaining cycle,” said Russell Price, a senior economist at Ameriprise Financial in Detroit.
“We’re seeing evidence of consumer demand returning.”
Companies like Dell and Caterpillar are among those benefiting from gains in exports and investments to replace outmoded equipment. Businesses added 159,000 workers to payrolls in October, a fourth month of gains exceeding 100,000, according to US labour department figures on November 5th. Unemployment held at 9.6 per cent.
The commerce department’s consumer spending report will also show personal income rose 0.4 per cent last month after dropping 0.1 per cent in September, according to the median estimate of economists surveyed. – (Bloomberg)
