WASHINGTON — Consumer spending slowed in June as income growth turned in the weakest performance in seven months.
Spending edged up a tiny 0.1 percent compared to a 0.2 percent rise in May, the Commerce Department reported Tuesday. It was the weakest showing since spending increased a similar 0.1 percent in February. Incomes were flat in June following a 0.3 percent rise in May. It was the worst reading since incomes fell 0.1 percent in November.
Spending is closely watched because it accounts for 70 percent of economic activity. Even with the weakness in June, spending for the April-June quarter revived, helping to lift overall economic growth to a solid rate of 2.6 percent during the quarter. Economists believe solid job growth will keep economic growth at healthy levels this quarter.
Andrew Hunter, a U.S. economist with Capital Economics, said that the new report showed that consumer spending had lost some momentum at the end of the second quarter “which isn’t a particularly promising sign going into the third quarter.”
The slowdown in income growth reflected declines in dividend and interest payments and other investment income. The key category of wages and salaries actually rose a solid 0.4 percent in June, reflecting strong employment growth during the month.