Consumer spending fell 0.3 percent on the month following a 0.5 percent gain in November that was initially listed at 0.6 percent and an unrevised 0.3 percent jump in October. Economists in the Reuters poll had forecast a 0.2 percent drop for December.
The combined 0.5 percent increase for October November and December was the smallest seasonal increase in three years.
U.S. factories expanded in January at their slowest pace in a year as new orders plunged to their lowest level since January 2014.
The Institute for Supply Management’s index dropped to 53.5 from 55.1 in December. Analysts had predicted a smaller decline to 54.5.
Slowing economic growth in Europe, China and Japan may have contributed to the drop in new orders which sank to 52.9 in January from 57.8 in December and 62.1 in November. It was the largest one month drop since last January when economic activity in much of the country suffered from record cold and snow.
Reading above 50 indicate expansions and below contraction.
Personal consumption rose 4.3 percent in the fourth quarter the best performance since 2006 as the economy grew at a 2.6 percent annualized rate.
Gasoline prices have plunged 43 percent since June and the saving rate climbed to 4.9 percent of disposable income in December from 4.3 percent the prior month.
Personal income rose 0.3 percent in December, slightly ahead of the 0.2 percent prediction but November’s result was adjusted down to 0.3 percent from 0.4 percent.
All of the categories in the ISM survey fell except inventories. Production dropped to 56.5 from 57.7, employment slipped to 54.1 from 56.0, back orders declined to 46.0 from 52.5, the lowest since July 2013.
Export orders dropped to 49.5 from 52.0. It was the first score below 50 for this important category since November 2012. Inventory accumulation rose to 51.0 from 45.5 in November.
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