Consumers pulled back on spending in April for the first time in almost a year. According to a government report released Friday, consumer spending fell in April, disappointing economists who had forecast a rise.
Consumer spending fell 0.2 percent, the weakest reading since May last year, after edging up 0.1 percent in March, the Commerce Department said. Economists had expected a 0.1 percent gain in April.
Analysts worry that the reading could point to a slowdown in economic activity.
Consumer spending accounts for nearly two-thirds of U.S. economic activity, and was held down by weak demand for utilities and a drop in receipts at gasoline stations on the back of a fall in gasoline prices at the pump.
U.S. Personal Income remained unchanged at a seasonally adjusted 0.0%, the Bureau of Economic Analysis said in a report.
Economists had worried that tax hikes and spending cuts were going to weigh on consumer’s pocketbooks.
Separate data released Friday revealed that Consumer sentiment hit its strongest reading in nearly six years in May. The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment rose to 84.5 from 76.4 in April.
The most surprising data this morning was the Chicago PMI reading that surprised analysts after surging to 58.7 in May from 49.0 last month. Economists were expecting a much smaller increase to 50.0. The surge indicates that regional manufacturing in the Midwest expanded at a moderate pace in May after contracting slightly in April.