• Reuters


U.S. consumer spending rose modestly in October and a key measure of business spending plans on equipment fell for a second straight month, suggesting some slowing in the pace of economic growth.

Other data on Wednesday showed initial claims for jobless benefits broke above 300,000 last week for the first time since September.

“We think growth will moderate in the fourth quarter. I’m not reading anything incredibly negative into this,” said Michael Gapen, a senior economist at Barclays in New York.

The Commerce Department said on Wednesday consumer spending, which makes up more than two-thirds of U.S. economic activity, increased 0.2 percent last month after being flat in September.

Still, the steady gains in consumer spending show some resilience in the economy in the face of slower growth in China and the euro zone, as well as a recession in Japan.

In a second report, the Commerce Department said nondefense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, declined 1.3 percent last month. That followed a 1.3 percent fall in September.

The drop in the so-called core capital goods orders suggested that a brisk pace of spending on equipment set in the third quarter ebbed early in the fourth quarter.

The dollar fell to a session low against the euro on the data, while prices for U.S. Treasury debt rose. U.S. stock index futures were little changed.

The economy grew at a 3.9 percent annual pace in the third quarter, buoyed by business and consumer spending.

Last month, core capital goods shipments, which are used to calculate equipment spending in the government’s gross domestic product measurement, fell 0.4 percent after rising 0.4 percent in September.

That could see economists lowering their fourth-quarter GDP growth estimates, already below a 3.0 percent rate.

A third report from the Labor Department showed initial claims for state unemployment benefits increased 21,000 to a seasonally adjusted 313,000 for the week that ended on Nov. 22.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, remained below 300,000 for an 11th straight week, a sign that the job market was improving.

Despite improving labor market conditions, income growth remains tepid. Income rose a modest 0.2 percent in October after a similar gain in the prior month, the Commerce Department report on consumer spending showed. With income growth matching consumer spending, the saving rate was unchanged at 5.0 percent.

The moderate pace of consumer spending, combined with weak gasoline prices, kept inflation under wraps. A price index for consumer spending edged up 0.1 percent after a similar gain in September.

In the 12 months through October, the personal consumption expenditures (PCE) price index rose 1.4 percent after advancing by the same margin in September.

Excluding food and energy, prices rose 0.2 percent after gaining 0.1 percent in September. The so-called core PCE price index increased 1.6 percent in the 12 months through October, the largest gain since December 2012.

Both price measures continue to run below the U.S. central bank’s 2 percent inflation target.

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