NEW YORK (Reuters) - Consumer spending rose in November by the most in three years as incomes climbed, suggesting fourth-quarter economic growth might be stronger than currently expected.
The Commerce Department said on Friday inflation-adjusted consumer spending rose 0.6 percent, and after-tax income climbed 0.8 percent when adjusting for inflation.
A gauge of planned U.S. business spending rose much more than expected in November, a hint that worries over tighter fiscal policy may not be holding back the factory sector as much as feared.
The Commerce Department said on Friday that non-defense capital goods orders excluding aircraft, a closely watched proxy for investment plans, jumped 2.7 percent last month, the second straight month of solid gains.
Economists had expected so-called core capital goods orders to rise just 0.3 percent. The reading for October was upwardly revised to a 3.2 percent gain from a previously reported 2.9 percent increase.
DAVID ADER, SENIOR GOVERNMENT BOND STRATEGIST, CRT CAPITAL GROUP, STAMFORD, CONNECTICUT:
“These are generally very good figures for the economy and stock market as the gains we see here are real and inflation clearly less of a threat.”
TIM GHRISKEY, CHIEF INVESTMENT OFFICER OF SOLARIS GROUP IN BEDFORD HILLS, NEW YORK
“Durable goods orders (was) a strong number for the second month in a row. That flies in the face of the weakness we have seen in the manufacturing sector.”
“This definitely shows economic strength above expectations. It’s not a roaring recovery by any means, we all know that, but this really shows some momentum here.”
TOM DI GALOMA, MANAGING DIRECTOR, NAVIGATE ADVISORS LLC, STAMFORD, CONNECTICUT
“This morning’s economic data is better across the board however the overwhelming factor remains the fiscal cliff which keeping Treasuries well bid.”
OMER ESINER, CHIEF MARKET ANALYST, COMMONWEALTH FOREIGN EXCHANGE, WASHINGTON D.C.
”The numbers look good across the board and while durable goods is notoriously a volatile indicator the sharp upside surprises top November figures as well as upward revisions suggest that capital spending was on stronger footing than previously expected.
“Overall these were strong figures, but they will likely not impact trading as all eyes are on Washington D.C. and fiscal cliff discussion.”
GARY THAYER, CHIEF MACRO STRATEGIST, WELLS FARGO ADVISORS, ST. LOUIS, MISSOURI
”The data were better than expected. It shows the economy is holding in here at the end of the year despite the concerns about the fiscal cliff.
”The durable goods orders figures show businesses are holding back on new spending, but not cutting spending. It looks like the economy still has some underlying strength that may help us get through the uncertainty of the fiscal cliff.
“The personal spending data was decent. It suggests that consumers, though they are still dealing with relatively high unemployment, are spending cautiously and that continues a trend we’ve seen much of this past year. We probably need to see better employment numbers to see stronger spending numbers.”
WAYNE KAUFMAN, CHIEF MARKET ANALYST AT JOHN THOMAS FINANCIAL IN NEW YORK
“Data looks good. Personal income has been one of the things we were worried about, so this looks really good. Durable goods were also better than expected. These are signs of an improving economy.”
FOREX: The dollar trimmed losses versus yen, the euro cut losses versus dollar <USD/>
Consumer spending rose by 0.6 percent in November - the largest jump in three years - suggesting fourth-quarter economic growth might be stronger than expected. link.reuters.com/hed44t
U.S. durable goods: New orders for durable goods rose by 0.7 percent in November. Excluding transportation and defense, new orders increased by 1.8 percent. link.reuters.com/xyk34t
Americas Economics and Markets Desk; +1-646 223-6300