Monday, April 30, 2012

U.S. data points to weaker economic momentum

(Reuters) - The U.S. economy appeared to downshift as it entered the second quarter, with consumers increasing their spending only modestly last month and a gauge of business activity in the Midwest falling sharply in April.

Consumer spending rose 0.1 percent in March from a month earlier when taking inflation into account, the Commerce Department said on Monday.

Separately, a report from the private Institute for Supply Management-Chicago showed business activity cooled much more than expected in the Midwest during April.

"The economy is losing a little momentum," said Gary Thayer, a macro strategist at Wells Fargo Advisors in St. Louis.

The U.S. recovery had already slowed substantially in the first quarter as businesses cut back on investment and restocked shelves at a slower pace, data on Friday showed. Gross domestic product expanded at a 2.2 percent annual rate in the first three months of the year compared to 3 percent in the fourth quarter.

Stronger consumer spending cushioned the blow, but Monday's data suggested consumers ended the quarter spending less freely. Read More