U.S. consumer spending recorded its biggest monthly increase in nearly five years in March, the government reported Thursday, indicating that the economy is gaining momentum after a sharp winter slowdown.
The Commerce Department said consumer spending—which accounts for more than two-thirds of U.S. economic activity—rose 0.9 percent in March, the biggest gain since April 2009. Consumer spending rose 0.5 percent in February.
Consumer spending was lifted by a 1.4 percent increase in goods purchases. Spending on durable goods—expensive manufactured items—rose 2.7 percent, the biggest increase since March 2010. Spending on services rose 0.7 percent, reflecting increased demand for utilities and healthcare services.
Personal income rose 0.5 percent in March, the largest gain since August, after advancing 0.4 percent the previous month.
With spending outpacing income growth, the saving rate, which is the percentage of disposable income households are saving, fell to 3.8 percent in March from 4.2 percent the previous month. The March saving rate was the smallest in more than a year.
Higher consumer spending points to stronger economic growth ahead. During the first quarter, severe winter weather limited spending, and the economy virtually stalled, growing at an annual rate of 0.1 percent. But Thursday’s report suggested that last quarter’s slowdown was confined mainly to January and February, before consumers increased spending in March.