Consumer spending rose more than expected in January, after declining for six consecutive months, according to government figures released Monday.
The Commerce Department report showed spending by individuals rose 0.6% last month, after dropping 1% in December. Economists surveyed by Briefing.com had forecast an increase of 0.4%.
January's increase comes after several months of declines in consumer spending as rising unemployment has undermined house hold purchasing power.
Despite last month's rebound, many economists expect consumer spending to remain weak given the outlook for continued economic deterioration.
"The trend in real consumption, however, remains downwards, and the further decline in consumers' sentiment signals continued declines," wrote Ian Shepherdson, an economist at High Frequency Economics, in a research note.
The report also showed that personal income rose 0.4% in January, following a decline of 0.2% in the previous month. Economists had forecast another 0.2% decline.
The personal income figure was boosted by pay raises for federal civilian and military employees, as well as cost of living increases for certain federal programs, according to the report. Excluding these factors, incomes rose 0.2% in January.
Despite the increase in spending, personal savings rose $128.7 billion to $545.5 billion in January. The personal savings rate, expressed as a percentage of disposable personal income, rose to 5% in January, compared with 3.9% in December.
Last month, the government reported that consumer spending rose an anemic 3.6% in 2008, the smallest full-year increase in 47 years.
