Consumer spending stateside rose more than expected in September as households boosted purchases of motor vehicles and inflation increased steadily, which could bolster expectations of an interest rate hike from the U.S. Federal Reserve in December.
Figures released Monday by the U.S. Commerce Department revealed that consumer spending, which accounts for about 70% of U.S. economic activity, increased 0.5% after dipping 0.1% in August. Last month's rise in consumer spending offered a fairly strong handoff from the third quarter to the current quarter.
The report was published ahead of the start of the Fed's two-day policy meeting on Tuesday. The U.S. central bank is not expected to raise rates at this upcoming meeting -- about a week before the Nov. 8 presidential election -- but is expected to do so in December.
Economists had forecast consumer spending rising 0.4% last month. When adjusted for inflation, consumer spending rose 0.3% after falling 0.2% in August.
The spending figures were incorporated into last Friday's report on third-quarter gross domestic product. Consumer spending increased at a 2.1% annual pace after advancing at a strong 4.3% rate in the prior period.
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