U.S. consumer spending increased for a fourth straight month in July amid strong demand for automobiles, pointing to a pickup in economic growth that could pave the way for the Federal Reserve to raise interest rates this year.
Consumer spending last month was lifted by a 1.6 percent surge in purchases of long-lasting manufactured goods such as automobiles. Spending on services rose 0.4 percent, but outlays on non-durable goods slipped 0.5 percent.
Personal income increased 0.4 percent in July after rising 0.3 percent in June. Wages and salaries advanced 0.5 percent. Savings rose to $794.7 billion from $776.2 billion in June.
“There are good indicators that incomes are improving and consumption is going to continue to stay strong, which points to a resilient U.S. economy,” said Brian Jacobsen, chief portfolio strategist with Wells Fargo Funds Management LLC, which oversees $242 billion. “The big question is whether inflation is going to break higher or continue like this -- it puts more emphasis on Friday’s employment report. It’s still a pretty murky picture right now.”
The dollar took a breather on Tuesday, as investors waited to see if U.S. employment data later this week would reinforce U.S. Federal Reserve official's recent hawkish messages.
The dollar index, which tracks the greenback against a basket of six major rivals, stood at 95.549 .DXY, below the previous session's high of 95.834 which was its highest since Aug. 12.
Oil prices settled down more than 1 percent on Monday, snapping two consecutive days of gains, on renewed concerns about an oil glut, a stronger dollar and expectations that Nigerian rebels will stop hampering that country's crude output.
Nigerian rebels pledged to end hostilities against the industry in Africa's No. 1 producer, which they repeatedly attacked earlier this year by blowing up pipelines.
Fears of a renewed glut offset news that oil and gas operators in the U.S. Gulf of Mexico have shut production equal to 168,334 barrels per day of oil and 190 million cubic feet per day of natural gas as a precaution against a tropical storm. The closures represent 11.5 percent of oil output and 5.5 percent of gas production.
U.S. West Texas Intermediate (WTI) crude CLc1 finished down 66 cents, or 1.4 percent, at $46.98.
Reference: Reuters, CNBC, Bloomberg
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