Page last updated at 13:24 GMT, Friday, 28 August 2009 14:24 UK

US consumer spending rises again

US shoppers
Consumer spending forms the backbone of the US economy

US consumer spending rose slightly in July, helped in part by the government's "cash for clunkers" car scrappage scheme.

Spending increased by 0.2% from the previous month, the third consecutive monthly rise. Personal income remained virtually unchanged.

The rate of increase was less than in June, when spending rose a revised 0.6%, the Commerce Department said.

Consumer spending accounts for about 70% of economic activity in the US.

It is, therefore, an important factor in the US economy's recovery.

On Thursday, revised figures for US economic activity beat analysts' expectations.

The figures confirmed that the economy had shrunk at an annual rate of 1% between April and June. Analysts had expected the figure to be revised downward.

The second-quarter figures were an improvement on the 6.4% annual pace of contraction in the first three months of the year, and they helped to fuel hopes that the US economy is on its way to recovery.

The US car scrappage scheme ended this week after the $3bn of funding allocated to it ran out.

Under the terms of the scheme, motorists were able trade in old cars and gain up to $4,500 towards the price of new one.

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