Business briefs: Consumer spending rose in January

WASHINGTON – U.S. consumers spent less for a second consecutive month in January, but the weakness came from a big decline in gas prices. Excluding price changes, consumer spending was up in January and analysts expect strong income gains will fuel further solid increases in spending in the months ahead.

Consumer spending declined 0.2 percent in January following a 0.3 percent drop in December, the Commerce Department reported Monday. But the weakness in both months was heavily influenced by big declines in gas prices. Excluding price changes, consumer spending rose 0.3 percent in January and would have been down a smaller 0.1 percent in December.

Income grew 0.3 percent in January as wages and salaries increased a strong $42.4 billion and excluding inflation, after-tax incomes shot up 0.9 percent, the best showing in two years.

Analysts expect that solid job gains and low unemployment will bolster consumer spending and lift economic growth this year to what they predict will be the fastest pace in a decade.

“Even though households didn’t take full advantage of their savings on gasoline in January, they still have a lot of scope to increase real consumption in the first half of the year,” said Paul Ashworth, chief U.S. economist at Capital Economics.

The combination of falling spending and rising income translated into an increase in the personal saving rate, which climbed to 5.5 percent of after-tax income, up from 5 percent in December and the highest level since late 2012.

Construction spending down in January

WASHINGTON – U.S. construction spending fell in January, reflecting weakness in spending on office buildings and other nonresidential projects and in government activity.

Construction spending fell 1.1 percent in January following a revised 0.8 percent increase in December, the Commerce Department reported Monday.

Spending on home construction rose 0.6 percent but spending on nonresidential projects dropped 1.6 percent, reflecting declines in hotels, office buildings and the category that covers shopping centers. Spending on government projects also declined in January, falling 2.8 percent.

Private economists had predicted a small overall gain in January.

The unusually severe weather in many parts of the country in January could have had an impact on activity. Economists expect the weakness will be temporary and are forecasting a rebound in activity once winter storms stop disrupting plans.