(Bloomberg) — American households kept spending in June, capping a stronger quarterly performance for the biggest part of the economy.
The 0.2 percent increase in purchases followed a 0.7 percent May advance, Commerce Department figures showed Monday in Washington. The June gain matched the median forecast of economists in a Bloomberg survey. Incomes climbed 0.4 percent for a third month.
Americans, enjoying a hiring pickup and no longer fettered by high prices at the gas pump, helped the economy stir last quarter after an early-year slumber. A tempering of spending at the end of the quarter shows stronger wage growth is probably needed to convince more consumers to open their wallets with greater frequency and allow the economy to build momentum.
“Wage growth is still a bit of an issue — you’re really not seeing a whole lot of acceleration,” said Gennadiy Goldberg, a U.S. strategist at TD Securities LLC in New York, who correctly projected the rise in consumer purchases. While the June figures show “a little bit weaker hand-off into the third quarter,” he said, “overall, we’re chugging along pretty decently here.”
The June gain helped spending increase in the second quarter at a 2.9 percent annualized rate, up from a 1.8 percent pace in the first three months of the year and stronger than the 2 percent average from 2010 through 2014.
Projections for June consumer spending in the Bloomberg survey of 62 economists ranged from no change to a 0.4 percent increase. The previous month’s reading was initially reported as a 0.9 percent advance.
The Bloomberg survey median called for incomes to rise 0.3 percent. May’s income reading was revised down from a previously reported 0.5 percent gain.
Disposable income, or the money remaining after taxes, rose 0.2 percent in June from the prior month after adjusting for inflation. The saving rate climbed to 4.8 percent from 4.6 percent in May.
The data showed that after adjusting for inflation, in order to generate the figures used to calculate gross domestic product, purchases were little changed in June after a 0.4 percent gain in May.
Sustained momentum in consumer purchases will be needed to keep U.S. growth chugging along. The economy grew at a 2.3 percent pace in the second quarter as household spending advanced more than projected, Commerce Department data showed last week.