US consumers turned a bit more glum about the future in April as they struggled with record gasoline prices and sluggish wage growth, reports showed on Friday. Separate reports showed Midwestern manufacturing ticking along at a faster-than-expected rate this month, and consumer spending - and inflation - higher in March. Economists said the day's data did little to change the outlook for interest rates when the Federal Reserve's policy-making Open Market Committee meets on Tuesday.
The personal consumption expenditures, or PCE, index, rose 0.5 percent in March after climbing 0.3 percent in February, further evidence of price pressures in the economy. The data supported expectations the Fed will raise overnight rates by a quarter-percentage point, to 3 percent, with another increase likely in June.
The University of Michigan's closely watched measure of consumer sentiment fell in April to 87.7 from 92.6 in March.
MARCH SPENDING, INFLATION UP: The Commerce Department said on Friday that US consumer spending rose 0.6 percent in March. But rising inflation accounted for most of the gain, and after taking that into account, personal spending edged up just 0.1 percent last month.
Stripping out food and energy prices, the core PCE index, the Fed's favoured inflation measure, rose 0.3 percent, topping its 0.2 percent February gain. Year over year, the price index for personal consumption was up 2.4 percent, versus an increase of 2.2 percent in February.
The US personal saving rate dipped to 0.4 percent in March from February's 0.5 percent, hitting its lowest level since October 2001.
At the same time, first-quarter worker compensation posted the smallest increase in six years, just 0.7 percent, as hefty bonuses paid on Wall Street at the turn of the year evidently were not matched on Main Street.
The rise in the Employment Cost Index, a broad gauge of what employers pay in wages and benefits, slowed from the 0.8 percent advance in the final three months of 2004, even though the index typically rises more in the first quarter.
Salaries and wages rose 0.6 percent in the January-March period. That held the 12-month rise steady at 2.4 percent - the smallest advance since the series began in the early 1980s - for a third straight quarter.
MIDWEST REGION'S EXPANSION CONTINUES:
The National Association of Purchasing Management-Chicago said its business barometer slipped in April to 65.6 from 69.2 but still outpaced market expectations of a more severe drop driven by cutbacks in auto production.
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