US consumer spending increased with a modest pace in October, while an important measure of business spending plans declined for a second consecutive month, indicating a slowdown in the economic growth pace.
Several other economic data, released on Wednesday, showed the rise in consumer confidence by a seven and half years high this month and a boost in the new home sales for a third consecutive month in October.
The US Commerce Department report showed increase in the consumer spending by 0.2 percent in October after being flat in September. Consumer spending makes up over two-thirds of the US economic activity.
Michael Gapen, an economist at Barclays, said, “We think growth will moderate in the fourth quarter. I’m not reading anything incredibly negative into this.”
Experts say the declining gasoline prices encouraged the consumer spending and this should help propping up growth in the fourth quarter.
According to the second report by the Commerce Department, the order for non-defense capital goods excluding aircraft dropped 1.3 percent in October. It has fallen 1.3 percent in September.
Meanwhile, the US dollar traded near session lows against the European currency on the data. The US Treasury debt prices increased, while the US stocks traded lower.