WASHINGTON - Americans spent at the fastest pace in five months in July after earning a little more. The increase in income and consumer spending could help boost an economy mired in subpar growth.
Consumer spending rose 0.4 percent in July from June, the Commerce Department said Thursday. That followed no change in June and a slight decline in May.
Income grew 0.3 percent, matching the gains from May and June. Americans also earned 0.3 percent more after paying taxes. The savings rate after taxes dipped to 4.2 percent in July. That's down slightly from 4.3 percent in June, the highest in a year.
Paul Dales, senior U.S. economist at Capital Economics, said the rise in spending showed "there is still life in American consumers." But he cautioned higher gas prices and a decline in consumer confidence in August could dampen spending in coming months.
Hiring picked up in July and could see further modest gains in August. The number of Americans seeking unemployment benefits was unchanged last week at a seasonally adjusted 374,000, the Labor Department said in a separate report Thursday.
Applications have risen slightly over the past three weeks but remain lower than they were in the spring, when hiring nearly stalled. When applications fall consistently below 375,000, it suggests that hiring is strong enough to lower the unemployment rate.