US consumer spending in August underscores economy's resilience

US consumer spending increased slightly more than expected in August as households went on vacation and dined out, keeping the economy on solid ground as the third quarter progressed, while inflation continued to steadily pick up.

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The report from the Commerce Department on Friday suggested the economy has so far retained most of its momentum from the April-June quarter. Signs of the economy's resilience evident in other data this week showing low layoffs and strong demand by businesses for equipment would argue against the Federal Reserve cutting interest rates again this year after the US central bank resumed policy easing last week.

But the hiring side of the labour market is struggling, with job growth almost stalling in the last three months amid a lingering drag from trade policy uncertainty as well as an immigration crackdown that has reduced the supply of workers.

"There is no support in this report for (Fed Governor) Stephen Miran's suggestions that policy interest rates have to be cut right away, and by a lot," said Carl Weinberg, chief economist at High Frequency Economics. "Indeed, there is no recommendation in these numbers for any easing of monetary conditions at all."

Consumer spending, which accounts for more than two-thirds of economic activity, rose 0.6% last month after an unrevised 0.5% advance in July, the Commerce Department's Bureau of Economic Analysis said. Economists polled by Reuters had forecast consumer spending increasing 0.58.