Consumer spending in the United States is increasing; monthly inflation slows down

WASHINGTON (Reuters) – US consumer spending rose steadily in August, underpinning expectations of solid economic growth in the third quarter, while a measure of core inflation remained on target. 2% of the Federal Reserve.

The Commerce Department said Friday that consumer spending, which accounts for more than two-thirds of US economic activity, rose 0.3% last month after an unrevised gain of 0.4% in July . Last month's spending was driven by spending on health care, which offset the decline in motor vehicle purchases.

The rise in consumer spending in August was in line with economists' expectations.

After adjusting for inflation, consumer spending rose 0.2% in August after rising 0.3% in July.

The report followed a decline in capital goods orders in August and a further widening of the trade deficit, which led economists to lower their estimates of gross domestic product in the third quarter. Annualized rate of 2.8%.

The economy grew at a rate of 4.2% in the second quarter, fueled by strong consumer spending as well as front-loading soybean exports to China before Beijing's retaliatory measures came into effect beginning of July.

The United States and China are involved in a growing trade war. Economists have warned that the increasingly bitter trade fight could undermine business and consumer spending.

US Treasury yields held near the session declined after the data. US stock index futures were trading and the .DXY dollar was stronger against a basket of currencies.

In August, spending on goods rose 0.3%, likely under the effect of rising gasoline prices. Expenditure on goods rose 0.5% in July. Spending on services rose 0.4% as spending on health care accounted for most of the increase.

Monthly price increases were moderate in August. The personal consumption expenditure (PCE) price index, excluding volatile components of food products and energy, remained unchanged. This was the weakest figure since March 2017 and followed a 0.2% gain in July.

In August, the value of the core PCE price index rose 2.0%. The core PCE index is the Fed's preferred inflation measure. It hit the 2% inflation target of the US central bank in March for the first time since April 2012.

The Fed raised interest rates on Wednesday for the third time this year, and President Jerome Powell told reporters that policymakers expect inflation to remain at the central bank's target "so supported ".

In August, personal income rose 0.3% after posting the same margin in July. Wages jumped 0.5%, the biggest gain in seven months, after rising 0.3% in July. The savings rate remained unchanged at 6.6% last month.