US spending gets 0.4% March boost

Consumers are one of the main drivers of US economic growth

US consumer spending rose in March, beating analysts' expectations.

It added 0.4% in the month, twice what had been forecast - after a 0.1% rise in February, figures from the Commerce Department showed.

The data is closely watched US consumer spending accounts for about two-thirds of total economic activity.

However, analysts remained cautious saying that most of the increased spending was due to the higher cost of energy and other products.

When price inflation was stripped out, consumer spending grew by a slower rate of 0.1%.

Job woes

Analysts said that consumers have been exercising greater caution with their money as they adjust to record petrol prices, rising unemployment and a slump in house prices.

Earlier this week Commerce Department data showed that the economy grew by 0.6% in the first three months of 2008, the same rate as in the preceding quarter.

This stagnation of growth was in part due to consumer spending slowing to its weakest level since 2001, when the US was in recession.

In separate data released on Thursday, the Labor department said that unemployment benefit claims rose by 35,000 to 380,000 last week - about twice the increase that economists had forecast.

The data highlighted the pressure being put on the US labour market by the problems in the economy.

On Friday a report will detail April's unemployment figures, which are expected to show an increase of about 70,000 people.