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US consumers spend more in August | US consumers spend more in August |
(about 1 hour later) | |
US consumer spending rose in August as Americans shrugged off credit and housing woes, official data from the US Commerce Department showed. | US consumer spending rose in August as Americans shrugged off credit and housing woes, official data from the US Commerce Department showed. |
It reported that spending rose 0.6% in August, the strongest gain in four months and up from a 0.4% rise in July. | It reported that spending rose 0.6% in August, the strongest gain in four months and up from a 0.4% rise in July. |
Meanwhile core consumer prices, which exclude food and energy costs, rose by 0.1% for a sixth consecutive month. | Meanwhile core consumer prices, which exclude food and energy costs, rose by 0.1% for a sixth consecutive month. |
And the annual year-on-year price increase of 1.8% was the smallest rise since a matching gain in February 2004. | And the annual year-on-year price increase of 1.8% was the smallest rise since a matching gain in February 2004. |
The strength in consumer spending should bolster confidence in the health of the US economy, after some analysts have predicted that recent mortgage market turmoil could trigger a slowdown. | The strength in consumer spending should bolster confidence in the health of the US economy, after some analysts have predicted that recent mortgage market turmoil could trigger a slowdown. |
Construction spending in the US also showed surprising strength. The Commerce Department reported a bigger-than-expected 0.2% gain for August, despite a slump in house building. | |
A 2.3% increase in investment in office building, shopping centres and other non-residential developments - the biggest monthly rise in six months - helped to offset the downturn in the housing market. | |
Further rate cuts? | |
The lower inflation figure boosted the prospect of further cuts in US interest rates, pushing the dollar to another record low against the euro. | |
The euro reached 1.4208 dollars in afternoon London trade, its highest level since the creation of the European single currency. | |
The US Federal Reserve cut the cost of borrowing by half a percentage point last week, and many experts think it will have to lower them further to make sure housing and credit problems do not result in a recession. | The US Federal Reserve cut the cost of borrowing by half a percentage point last week, and many experts think it will have to lower them further to make sure housing and credit problems do not result in a recession. |
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