US keeps on spending

Americans kept buying cars in March

American consumers have increased spending on cars and washing machines in March in spite of the war in Iraq, the US Commerce Department has said.

Hopes for a consumer-led rebound of the sluggish US economy were lifted after the Commerce Department said consumer spending increased 0.4% in March, compared to a 0.2% rise in February.

Although the increase, the biggest gain this year, was slightly weaker than expected by analysts, the markets immediately responded.

At 1817 GMT, the Dow Jones index on Wall Street had climbed 169 points, or 2%, to 8,476.

The Commerce Department further said Americans saw their personal incomes increase 0.4% in March, which was higher than expected.

Cars

"If there was ever a month we were going to be worried about the consumer it was March," said Naroff Economic Advisors president and chief economist Joel Naroff.

"Even though spending was not great and it was largely on motor vehicles, the fact is, people did not stop buying," he said.

Investors have been increasingly worried about the sluggish state of the world's largest economy.

In March, two key surveys of consumer confidence dropped to the lowest levels in ten years.

"If they did not stop buying in March, now that the war is over and confidence is beginning to come back, there is some real hope that they will pick up the buying pace," Mr Naroff said.