U.S. consumers spent more in May as their income increased at the fastest pace in three months, the government reported Thursday, adding to data that have suggested economic growth could improve.
The Commerce Department said consumer spending rose 0.3 percent last month after a 0.3 percent drop in April, which was the biggest monthly decline since the autumn of 2009. The increase in May spending was partly due to a 0.9 percent gain in purchases of durable goods, including autos.
Income rose 0.5 percent in May, much better than the 0.1 percent April increase and the biggest gain since February. Despite the advance, after-tax income is up only 1.1 percent over the past year.
With income rising faster than spending, the U.S. savings rate rose to 3.2 percent in May, up from 3 percent the previous month. It was the highest level since December.
Consumer spending is closely watched because it accounts for 70 percent of U.S. economic activity. While the pace of spending has slowed from the 2.6 percent annual rate recorded in the first quarter, consumers likely will continue to drive economic growth in the second quarter.
Recent data, including housing, regional manufacturing, business pending plans, and consumer confidence, have pointed to an economy that is regaining momentum after stumbling early in the second quarter.