Consumer spending up 0.5%

Associated Press

WASHINGTON

Consumers increased their spending in June at the fastest pace in four months even though their income growth slowed.

Consumer spending rose 0.5 percent in June compared with May, when spending was up 0.2 percent, the Commerce Department reported Friday. It was the best gain since a 0.7 percent rise in February.

Income growth slowed to a 0.3 percent rise in June, weaker than May’s 0.4 percent gain.

The hope is that strong consumer spending will help boost a lackluster economy to faster growth in the second half of this year. But for that to happen, economists say income growth needs to accelerate.

Spending on nondurable goods was up 1.3 percent, reflecting in part rising gas prices, while demand for durable goods rose 0.8 percent, reflecting strength in auto sales.

Consumer spending is closely watched because it drives roughly 70 percent of economic activity.

Consumer spending has held up better than analysts had expected so far this year.