U.S. consumer spending increased less than expected in October as households took advantage of rising incomes to boost savings to a seven-month high, but remained sufficiently strong to support economic growth in the fourth quarter.
The Commerce Department said on Wednesday that consumer spending, which accounts for about 70 percent of U.S. economic activity, increased 0.3 percent after an upwardly revised 0.7 percent gain in September.
Economists polled by Reuters had forecast consumer spending would rise 0.4 percent last month. Spending in September was previously reported to have risen 0.5 percent.
The data came on the heels of a string of reports on the housing market, manufacturing, the labor market and inflation that have suggested the economy sustained its momentum early in the fourth quarter after growing at its quickest pace in two years in the July-September period.
The government reported on Tuesday that gross domestic product increased at a 3.2 percent annual rate in the third quarter, driven by strong consumer spending and a surge in soybean exports.
With consumer spending firming, inflation continued to gain steadily. The personal consumption expenditures (PCE) price index rose 0.2 percent after a similar increase in September.