US consumer spending up but jobless claims remain high

US CONSUMERS spent more in November for a fifth consecutive month while incomes also rose slightly more than expected, according to the latest government data.

Spending rose 0.4 per cent after increasing by an upwardly revised 0.7 per cent in October, the Commerce Department said, reinforcing views of a solid economic growth pace in the fourth quarter.

The report also showed the Federal Reserve’s preferred measure of consumer inflation – the personal consumption expenditures price index, excluding food and energy – rose 0.1 per cent after being flat for four straight months.

In the 12 months through November, the core PCE index rose 0.8 percent, the same margin as in October and still the smallest year-on-year gain since records started in 1960.

The gains in spending were the latest to suggest an acceleration in the growth pace this quarter after output increased at a 2.6 per cent annualised rate in the July-September period.

But the good news was tempered by new jobless claims data, which showed that first-time jobless benefits claims barely budged last week.

Initial claims dipped slightly to 420,000 in the week ended December 18, suggesting that the labour market is healing too slowly to drag down the unemployment rate.

The Labour Department reported identical figures a week earlier. A spokesman said the weekly jobless claims series was ‘settling down a bit’ after a volatile period in November and there were no unusual factors affecting the data.

Continuing claims, which exclude the millions of Americans relying on extended benefits, dipped to 4.06 million in the week ending December 11, down from 4.17 million a week earlier.

The four-week average, which smoothes out week-to-week volatility, fell to 4.16 million from 4.19 million.

The total number of Americans claiming benefits – including those relying on a federal emergency program of extended benefits that was the subject of heated political debate in Washington – was 8.9 million in the week ending December 4, down from 9.2 million a week earlier.