Shoppers spent more in October after September's decline
US consumer spending rose more than expected in October, raising hopes that the economic recovery is continuing despite stubbornly high unemployment.
Spending by consumers increased by 0.7% compared with the previous month, said the Commerce Department, more than market expectations of a 0.5% gain.
The rise followed the 0.6% decline seen in September following the end of the US car scrappage scheme.
Consumer spending accounts for more than two-thirds of the US economy.
"Don't count consumers out, they are making a contribution to the recovery," said analyst Ken Mayland, president of ClearView Economics.
The rebound in consumer spending came despite the most recent official figures showing that the unemployment rate in the US rose to 10.2% in October, the highest rate since April 1983.
The Commerce Department data showed that consumers increased their spending in October on both durable manufactured goods, such as cars and household appliances, and nondurables, such as food and clothes.
"Certainly everybody is looking for the consumer to begin step up here a little bit in the economy, so this is positive data," said Tim Ghriskey, chief investment officer at Solaris Asset Management.
The Commerce Department also revealed that sales of new homes rose at an annualised rate of 6.2% in October, boosted by people buying new property before the end of a tax credit.