American consumers spent less in April than the prior month, a surprise decline that badly missed economists’ expectations even as private and government wages and salaries increased.
Higher wages and salaries lifted U.S. personal income 0.3% in April, the Commerce Department reported on Friday, though below the 0.4% increase projected by economists surveyed by Bloomberg. The Commerce Department also reported consumer spending slid 0.1%, far below the 0.2% increase economists expected.
It was the first decline in consumer spending since April 2013.
Though consumer spending fell in April, data have broadly indicated the U.S. labor market continues to improve as employers continue to add jobs. The Commerce Department reported private wages and salaries grew $16.9 billion in April, though less than the gain reported in March. Government wages and salaries were up $1.4 billion.
The report comes a day after U.S. stocks closed broadly higher, with the S&P 500 reaching another record high from earlier in the week. And while the Commerce Department this week revised its estimate for real gross domestic product growth in the first quarter, saying it fell by 1%, many blamed the fall on an unusually severe winter and are expecting a strong rebound in the current quarter.
The personal saving rate — the share of after-tax income that doesn’t get spent — totaled 4% in April, up from 3.6% in March.