- John Ryding, chief economist at RDQ Economics
Consumer spending in the world's biggest economy declined for the first time in eight months in September, adding to signs the US economy lost some steam heading into the final quarter of the year. The drop in consumer spending may be temporary, as other data showed wages registered the largest rise in more than six years in the third quarter. Consumer spending fell 0.2% last month following an upwardly revised 0.5% increase a month earlier, the Commerce Department reported. The latest spending figures will be reflected in the second revision of the third-quarter gross domestic product, as consumer expenditures account for roughly 70% of the US economy.
Also, the Employment Cost Index, the broadest gauge of labour costs, surged 0.7% following the same increase in the second quarter, according to the Labour Department. Federal Reserve officials view the ECI as one of the better measures of labour market slack. In the 12 months to September, labour costs increased 2.2%, the largest jump since the second quarter of 2011, following the 2.0% advance in the 12 months through June. Wages and salaries, which make up 70% of employment costs, rose 0.8% in the third quarter, the largest increase since the second quarter of 2008. They had gained 0.6% in the second quarter. Wages and salaries soared 2.1% in the 12 months through September, the biggest rise since 2009, after surging 1.8% in the 12 months through June.
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