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US consumer spending surged a strong 0.9 per cent in March, biggest monthly gain in 4 1/2 years

WASHINGTON - U.S. consumers ramped up their spending in March at the fastest pace in 4 1/2 years, a sign that the economy is gaining momentum after its winter slowdown.

The Commerce Department said Thursday that consumer spending rose 0.9 per cent, the largest monthly gain since April 2009. The department also revised up its estimate of the spending increase in February to 0.5 per cent from 0.3 per cent.

Consumers spent more on manufactured goods last month. Autos and furniture led much of the gains, according to a separate retail sales report released last month.

Income rose 0.5 per cent in March after rising 0.4 per cent in February.

Higher spending points to stronger growth ahead because consumer activity accounts for roughly 70 per cent of the economy. During last quarter as a whole, harsh winter weather curbed spending, and the economy barely grew at an annual rate of just 0.1 per cent.

But Thursday's report suggested that last quarter's slowdown was confined mainly to January and February, before consumers stepped up spending in March.

For last quarter overall, consumer spending did grow at a 3 per cent annual rate. But that gain was dominated by a 4.4 per cent rise in spending on services, reflecting in part higher utility bills during the unusually cold winter.

Economists say warmer weather likely encouraged people to make purchases last month that they had delayed because of snowstorms earlier this year.

"The weather-related rebound may now have run its course," said Paul Dales, senior U.S. economist at Capital Economics.

Dales projects that consumer spending will increase at a 4.5 per cent annual clip this quarter and will help the overall economy grow at a 3.5 per cent annual rate over that time.

Employers added 192,000 jobs in March and 197,000 in February, after slight gains in the preceding months. The hiring should help to drive income and spending gains in March.

On Friday, the Labor Department will issue the April employment report. Economists have forecast that 210,000 jobs were added, according to the data firm FactSet.

Payroll processer ADP said Wednesday that private employers added 220,000 jobs in April, the most since November, after adding 209,000 in March.

The Canadian Press


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