WASHINGTON — U.S. consumer spending rebounded in May and new applications for unemployment benefits fell last week, suggesting the economy remained on a moderate growth path.
The Commerce Department said on Thursday consumer spending increased 0.3 percent last month after a revised 0.3 percent drop in April. Consumer spending in April was previously reported to have declined 0.2 percent.
Last month's spending increase was in line with economists' expectations. When adjusted for inflation, consumer spending rose 0.2 percent last month after dipping 0.1 percent in April.
Georgia, Albany Metro unemployment rates up slightly
ATLANTA – The Georgia Department of Labor announced today that metro Albany’s unemployment rate increased to 9.5 percent in May, up nine-tenths of a percentage point from 8.6 percent in April. The rate was also 9.5 percent in May a year ago.
The rate increased primarily because of an increase in layoffs and the seasonal influx of jobseekers into the labor force, as new graduates began searching for work.
The number of layoffs, represented by new claims for unemployment insurance benefits, rose by 495, or 50.3 percent, to 1,479 in May from 984 in April. The increases came mostly in manufacturing and accommodations and food services. Also, the number of initial claims was up over the year by 556, or 60.2 percent, from 923 in May 2012. Most of the over-the-year increase came in manufacturing.
The number of people entering the labor force, those employed and actively seeking employment, rose by 367 to 73,790 in May from 73,423 in April.
The number of jobs decreased by 400, or six-tenths of a percentage point, to 60,800, down from 61,200 in April. Most of the job losses came in state education and federal government and the service-related industries. Over-the-year, 300 jobs were lost, mostly in local government and trade and transportation.
Metro Athens had the lowest area jobless rate at 6.2 percent, while the Heart of Georgia-Altamaha region had the highest at 11.5 percent.
Meanwhile, Georgia’s seasonally adjusted unemployment rate for May was 8.3 percent, up from 8.2 percent in April. The rate was 9.1 percent in May a year ago.
In a separate report, the Labor Department said initial claims for unemployment benefits fell 9,000 to a seasonally adjusted 346,000. The four-week moving average for new claims, which irons out week-to-week volatility, fell 2,750 to 345,750.
U.S. stock index futures slightly added to earlier gains after the data. U.S. Treasuries prices extended price gains and yields fell to session lows, while the dollar pared gains against the yen.
Recent data, including housing, regional factory activity, business spending plans and consumer confidence, have pointed to an economy that is regaining some speed after stumbling early in the second quarter.
That is broadly supportive of the view the Federal Reserve expressed last week that the downside risks to the economy's outlook have waned. Fed Chairman Ben Bernanke said the U.S. central bank could start scaling back on the pace of its monthly bond purchases this year.
Consumer spending accounts for 70 percent of U.S. economic activity. Though the pace of spending has slowed from the 2.6 percent annual rate notched in the first three months of the year, consumers will likely continue to drive growth in the second quarter.
The firming growth theme held as other details of the Commerce Department report showed income grew 0.5 percent last month, the largest gain since February, after nudging up 0.1 percent in April. That reflects a steady pace of job gains.
Households also saved a bit more last month, lifting the saving rate to a five-month high of 3.2 percent.
There was also a bit of inflation in the economy last month, pointing to some pick-up in demand.
A price index for consumer spending inched up 0.1 percent in May after declining two straight months. A core reading that strips out food and energy costs also rose 0.1 percent after being flat in April.
Over the past 12 months, inflation rose 1 percent, still below the Fed's 2 percent target. The index had increased only 0.7 percent in the period through April.
Core prices were up 1.1 percent from a year ago after rising by the same margin in April.
Falling healthcare costs are dampening inflation pressures. Bernanke has said the weak healthcare costs were likely to transitory.