In February, U.S. consumer spending climbed by more than at any time in the past five months, due to salary increases signaling a job market improvement is helping to increase demand.
Purchase in household, which are nearly 70% of the U.S. economy, increased by 0.7% after increasing by 0.4% during January, which was more than had been expected.
Labor market increases and a rise in the household wealth that was tied to increased stocks and home values have helped Americans recover from the fallout of costlier fuel and higher taxes.
Disposable income, which is the money received after paying taxes increased by 0.71% after making an inflation adjustment. During the prior month, the rated dropped by nearly 4%.
Incomes are being helped by the growth in payroll. Employers added in February more than 236,000 new workers after an increase the previous month of more than 119,000. The average hourly earnings increased by 2.1% from the same month one year ago, which matched the monthly year-to-year gains for the two previous months.
A number of merchants are forecasting their sales to sustain the pace they are currently on. Macy’s, the U.S. department store chain, which is the second-largest in the country, projected its sales at stores that have been opened at least 13 months to rise over 3.5% during 2013, after growing by 3.7% during 2012.
Big ticket item spending, such as automobiles, has also grown as households are now replacing their older vehicles while taking advantage of borrowing costs that remain low.
