Oct. 28/11 (Reuters) — Sluggish growth in U.S. consumer income in September led households to cut back on saving to increase their spending, casting doubts over the durability of the economy’s third-quarter growth spurt.

The Commerce Department said on Friday consumer spending increased 0.6 percent, matching expectations, after a 0.2 percent gain in August. Consumer spending accounts for about 70 percent of U.S. economic activity.

With income edging up 0.1 percent last month, spending was at the expense of saving, which dropped to an annual rate of $419.8 billion, the lowest level since August 2009, from $479.1 billion in August.

The saving rate, the percentage of disposable income socked away, fell to 3.6 percent, the slowest since December 2007, from 4.1 percent in August.

Income fell 0.1 percent in August and economists had expected a 0.3 percent increase in September.

“Very weak income, but very solid consumption even though consumer confidence is in recession. So that’s good news for the economy,” said Kurt Karl, chief U.S. economist at Swiss Re in New York. “(But) it’s hard to sustain without more income growth.”

A separate report from the Labor Department showed wages and salaries expanded 0.3 percent in the third quarter — the smallest rise in a year — after gaining 0.4 percent pace in the prior quarter.

This is an excerpt from Reuters as it appeared on October 28, 2011. For updates or to read the current version of this post in its entirety, please click here.

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