US consumer spending rose more than expected in December, but weak income growth suggested the economy could cool off in the first quarter. The Commerce Department said on Friday that consumer spending increased 0.4 per cent after rising by a revised 0.6 per cent in November. Economists polled by Reuters had forecast consumer spending, which accounts for more than two-thirds of US economic activity, rising 0.2 per cent last month. The dollar pared losses against the yen and held gains versus the euro after the data. US stock index futures were down largely on weak inflation data from Europe . When adjusted for inflation, consumer spending rose 0.2 per cent after advancing 0.6 per cent in November. The figures were included in the advance fourth-quarter gross domestic product report published on Thursday and confirmed the strong momentum in spending at the end of 2013. Consumer spending recorded its strongest gain in three years in the fourth quarter, helping to lift the economy to a 3.2 per cent annual growth rate during that period. Income, however, was unchanged last month after rising 0.2 per cent in November. Income continued to be held back by stagnant wage growth as the economy works through slack in the labor market. But there are signs that wage growth could be on the brink of acceleration. In a separate report, the Labour Department said wages and salaries increased 0.6 per cent in the fourth quarter, the biggest jump since the third quarter of 2009. It followed a 0.3 per cent advance in the third quarter. Wages and salaries account for 70 per cent of employment costs. They were up 1.9 per cent in the 12 months through December, the largest gain since 2009, and were up 1.7 per cent in the same period in 2012. Last month, income at the disposal of households after adjusting for inflation fell 0.2 per cent. That move could take some steam out of consumer spending in the first quarter.
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