WASHINGTON: US consumer spending increased for a fourth straight month in July amid strong demand for automobiles, pointing to a pickup in economic growth that could pave the way for the Federal Reserve to raise interest rates this year.

The Commerce Department said on Monday that consumer spending, which accounts for more than two-thirds of US economic activity, rose 0.3 per cent last month after a 0.5pc gain in June.

July’s increase was in line with economists’ expectations. When adjusted for inflation, consumer spending also rose 0.3pc in July after advancing 0.4pc in June.

Consumer spending appears to have retained some of its momentum from the second quarter, when it grew at a 4.4pc annual rate, the fastest in nearly two years. That jump helped to mitigate some of the impact of a sharp inventory drop and prolonged business investment downturn.

The economy grew at a lackluster 1.1pc annual rate in the second quarter.

Published in Dawn, August 30th, 2016