U.S. consumer spending inches higher

U.S. consumers spent slightly more in May than they did in April, a sign that Americans are cautious about the economic recovery.

The Commerce Department says that consumer spending rose 0.2 per cent last month, an improvement from April's reading of no change.

Analysts expected spending to edge up only 0.1 per cent, according to a survey by Thomson Reuters.

But much of the higher spending likely reflects greater use of electricity and other utilities. Spending on consumer goods actually declined, the agency said.

The modest showing "should partly ease fears of a double-dip and deflation," BMO economist Sal Guatieri said.

Incomes rose by 0.4 per cent, slightly less than expected. They were boosted by the temporary hiring of census workers. Disposable income (the amount available to spend after taxes have been paid) also rose 0.4 per cent.

But consumers opted to save much of that as the national savings rate — or the percentage of income that wasn't spent — rose to four per cent, the second straight increase.