US consumer spending and personal income both rose in April, while underlying inflation remained muted in another sign the economy is growing at a firm pace, a government report showed on Friday. While the April figures indicated the economy was chugging along at a steady pace, consumers were a bit less upbeat in May, according to another report on Friday. Spending last month rose a slimmer-than-expected 0.6 percent, from a rise of 0.9 percent in March, the Commerce Department said. Income rose 0.7 percent from an increase of 0.5 percent.
Analysts on Wall Street had expected a larger 0.8 percent advance in spending after an initially reported 0.6 percent March gain. The April increase in income matched forecasts.
On an inflation-adjusted basis, spending rose just 0.2 percent in April after an upwardly revised 0.4 percent March increase.
"On the whole, what the April numbers on consumption and spending are telling us is that the March soft patch was a fleeting event," said Richard DeKaser, chief economist at National City Corp in Cleveland.
The department's gauge for consumer inflation - favoured by policy-makers at the Federal Reserve - rose a hefty 0.4 percent, but that was a bit less than in March, when it increased 0.5 percent.
Stripping out volatile food and energy costs, prices rose just 0.1 percent, the smallest increase since December and a slowdown from a 0.3 percent March advance.
The personal saving rate, the percentage of disposable income socked away by consumers, moved down to 0.4 percent, its lowest level since October 2001. While the level of savings decreased, consumers were a little less glowing on future economic prospects this month, although they were more positive than analysts had expected. The University of Michigan said its measure of confidence had slipped to 86.9 in May from 87.7 in April, according to market sources who saw the subscription-only report.
The preliminary reading for May, reported two weeks ago, had been 85.3, and analysts on average had called for a final May reading of 86.0.
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