U.S. personal spending surges 0.9 percent m-o-m in March

The Commerce Department announced on Monday that consumer spending in the U.S. edged up 0.1 percent m-o-m in February, following a revised 0.3 percent m-o-m gain in January (originally a 0.1 percent m-o-m increase). Economists had forecast the reading to show a 0.7 percent m-o-m growth.

Meanwhile, consumer income rose 0.2 percent m-o-m in February after an unrevised 0.1 percent m-o-m drop in the previous month.

The February increase in personal income primarily reflected gains in compensation of employees, government social benefits to persons, and personal dividend income, which were partially offset by a decrease in personal interest income, the report said.

For March, consumer income posted an advance of 0.1 percent m-o-m, which primarily reflected increases in compensation of employees and government social benefits to persons that were partially offset by decreases in personal interest income and farm proprietors’ income.

Personal spending in surged 0.9 percent m-o-m in March, beating economists’ forecast for a 0.7 percent climb. That was the biggest increase in personal spending since August 2009. Within goods, increases were widespread, with spending on motor vehicles and parts the leading contributor. Within services, the largest contributor to the increase was spending on health care.

At the same time, personal consumption expenditures (PCE) price index, excluding the volatile categories of food and energy, which is the Fed's preferred inflation measure, was flat m-o-m in March, following a 0.1 percent m-o-m advance in the prior month. Economists had projected the index would increase 0.1 percent m-o-m.

In the 12 months through March, the core PCE increased 1.6 percent, decelerating from an unrevised 1.7 percent gain in the 12 months through. Economists had forecast a gain of 1.7 percent y-o-y.