US consumer spending continued to gain pace in the key shopping month of November, buoyed by a slight rise in household income, the Department of Commerce reported Monday.
Spending was up 0.5 percent in November -- which includes Thanksgiving and the start of the Christmas shopping season -- compared to the prior month.
November's increase was higher than the 0.4 percent recorded in October, and came as household income ticked up by 0.2 percent after a disappointing 0.1 percent fall the previous month.
Consumer spending accounts for more than two-thirds of US economic activity and is a keenly anticipated indicator.
Barclays analyst Michael Gapen said the back-to-back October and November consumption data are "two of the strongest monthly readings for personal consumption in over a year and are consistent with our expectation that household spending would strengthen" due to better employment and wealth effects.
The better consumption data, along with other recent data, should encourage policy makers, yet weak inflation trends will "provide reason for caution," Gapen said.
Economist Joel Naroff said the report suggested retailers had succeeded in luring customers to stores with a barrage of promotions around the annual "Black Friday" sales the day after Thanksgiving.
But Naroff noted that consumers savings took a hit from the higher November spending and predicted customers would start cutting back. Some retailers have complained of a weak December.
"All said, though, investors should like this report and it will make those at the Fed who thought that tapering is a good idea exhale a little," Naroff said.