Consumer spending probably increased in February by the most in five months as incomes rebounded, providing a kick for the U.S. economy at the start of the year, economists project a report to show this week.
Purchases rose 0.6 percent last month after climbing 0.2 percent in January, according to the median of 61 estimates in a Bloomberg survey before Commerce Department figures due on Friday. Other data may show the biggest gain in durable goods orders in five months and sustained strength in the housing market.
Resilient personal spending that accounts for 70 percent of the economy, along with advances in manufacturing and housing, points to a broadening of the expansion. Labor market progress and an increase in household wealth linked to rising home values and stocks are helping Americans navigate the hurdles of higher payroll taxes and elevated gasoline prices.
“Consumer spending is growing at a decent pace, given all the headwinds,” said Nigel Gault, chief U.S. economist for IHS Global Insight in Lexington, Massachusetts. “Capital goods orders are moving up again. That says something about domestic demand.”
The Commerce Department’s report may also show that incomes grew 0.9 percent following a 3.6 percent plunge in January that was the biggest since 1993, economists in the Bloomberg survey projected. A 2 percentage-point increase in the payroll tax rate went into effect at the start of the year.
Incomes are being buoyed by payroll growth. Employers added a net 236,000 workers in February after a 119,000 increase the prior month. Average hourly earnings climbed 2.1 percent from February 2012, matching the year-over-year gains in the previous two months as the strongest since March 2012.
Williams-Sonoma Inc. is among retailers enjoying a pickup in sales. Same-store purchases at its West Elm home-goods chain increased 19 percent in the San Francisco-based company’s fiscal fourth quarter, while sales at Pottery Barn Kids advanced 7.7 percent.
Some merchants are forecasting the pace of sales will be sustained throughout the year. Macy’s Inc., the second-largest U.S. department-store chain, projects sales at stores open at least a year will rise 3.5 percent this year, after growing 3.7 percent in 2012.
Spending on big-ticket items like automobiles is also growing as households replace older vehicles and take advantage of low borrowing costs. Cars and light trucks sold at a 15.3 million annual rate in February after a 15.2 million pace the prior month, Ward’s Automotive Group data showed.
Rising stock prices and a recovering housing market are helping boost household finances. The Dow Jones Industrial Average climbed to a record this month and the broader Standard & Poor’s 500 Index closed Friday within 10 points of an all-time high.
The S&P/Case-Shiller index of property values in 20 cities, to be released Tuesday, climbed 7.9 percent in the 12 months ended January, the biggest year-over-year gain since June 2006, according to the Bloomberg survey median.
The same day, the Commerce Department may report a 420,000 annualized pace of new home sales last month after they reached 437,000 in January, which was the highest level since July 2008, according to the Bloomberg survey median. Figures from the National Association of Realtors the following day may show more Americans signed contracts to buy previously owned properties last month.
Persistent strength in the auto industry is helping give a lift to the nation’s factories. Orders for durable goods, those meant to last at least three years, jumped 3.9 percent in February after a 4.9 percent slump the prior month, Commerce Department data may show on Tuesday.
The gain probably reflected a rebound in demand for commercial aircraft. Boeing Co. said earlier this month that it received orders for 179 aircraft in February, up from two a month earlier.
Durable bookings excluding the volatile transportation industry probably increased for the sixth consecutive month, the Commerce Department’s report may show.
3M Co., the St. Paul, Minnesota-based maker of products ranging from Scotch tape to dental braces, is among companies expecting that steady growth in the U.S. will help offset weakness in other markets such as Europe, especially in the consumer electronics business.
“We’re operating pretty steady in the U.S. and Latin America,” David Meline, chief financial officer, said at a conference last week. “In Asia, it’s more mixed. Western Europe continues to have a number of challenges.”
Finally, revised figures from the Commerce Department on Thursday may show the economy expanded at a revised 0.5 percent annual pace in the fourth quarter, faster than the government’s previous estimate of 0.1 percent growth, according to the median forecast in a Bloomberg survey.
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