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Income, consumer spending up

Associated Press

WASHINGTON — Americans’ incomes, bolstered by strong gains in hiring, rose by 0.3 percent in February while consumer spending climbed at an even faster pace of 0.5 percent, the government reported Thursday.

The Commerce Department said the gain in spending followed a much smaller 0.1 percent increase in January and reflected the fact that auto sales rebounded last month after having fallen in January.

The 0.3 percent rise in incomes was attributed to a surge of 262,000 new jobs in February, the biggest increase in four months. Further solid gains in both incomes and consumer spending are expected in the months ahead as the consumer continues to be a driving force in the economy.

Analysts said the February gains in incomes and spending showed the economy was being propelled this year by continued strength in employment growth and consumer spending — which accounts for two-thirds of total economic activity.

“Strong payroll gains over the next few months will surely boost the numbers” for incomes, Ian Shepherdson, chief U.S. economist for High Frequency Economics, said in a note to clients.

In other economic news, the Commerce Department reported that orders to U.S. factories rose by 0.2 percent in February as strong demand for commercial aircraft, steel and computers offset a drop in demand for new cars and industrial machinery. The gain was weaker than the 0.5 percent increase that many economists had been expecting, but it still represented an improvement following no change at all in January orders.

Meanwhile, the Labor Department said that the number of Americans filing new claims for unemployment benefits rose by 20,000 to 350,000 last week. It was the highest level for jobless claims in 11 weeks. However, the four-week moving average for claims rose by a more modest 8,500 to 336,000 last week, a level still low enough to signal continued job creation in the economy.

Analysts are expecting another strong gain in employment of around 220,000 jobs when the March jobs performance is reported today.