Consumers increase savings in June, but not spending

WASHINGTON - Consumers are saving more and being picky about how they spend their money, new data show.

Personal spending was unchanged in June, the Commerce Department reported yesterday. It was the third straight month of lackluster consumer demand. Incomes were also flat, the weakest showing in nine months.

And the personal savings rate rose to 6.4 percent of after-tax incomes in June. The savings rate is now about three times the 2.1 percent average for all of 2007, before the recession began.

"It is of some comfort that households now appear to have something of a cushion that can be used to pay down debt," said Paul Dales, U.S. economist at Capital Economics.

The disappointing report on spending and income was among a raft of data released Tuesday that confirmed the economy ended the April-to-June quarter on a weak note.

Factory orders dropped 1.2 percent in June to a seasonally adjusted $406.4 billion, the Commerce Department said. It was the second consecutive decline.

The number of buyers who signed contracts to purchase homes fell in June. The National Association of Realtors says its seasonally adjusted index of sales agreements for previously occupied homes dipped 2.6 percent to a reading of 75.7. - AP