CSBJ Daily

The Associated Press

WASHINGTON– Soaring prices for food, gas and other everyday needs pushed consumer spending to a faster pace than expected in March.

The Commerce Department reported today that consumer spending was up 0.4 percent, double the increase that economists had forecast.

However, once inflation was removed, spending edged up a much slower 0.1 percent. The March figures represent the fourth straight lackluster performance as consumers have been battered by record gasoline prices, a deep slump in housing and rising job layoffs.

In other economic news, construction spending dropped by 1.1 percent in March. That was the fifth decline in the past six months and was led by a record 4.6 percent plunge in spending on housing.

Housing construction had fallen for 23 straight months before a small 0.2 percent increase in February. But it remains in a steep slump as builders are still struggling to reduce record inventories in the face of the worst housing downturn in more than two decades.

Meanwhile, a closely watched gauge of manufacturing activity posted a reading of 48.6 for April, unchanged from March. That was a slightly better showing than economists had been expecting from the Institute for Supply Management index.

The Labor Department reported that claims for unemployment benefits rose by 35,000 to 380,000 last week. That was a much bigger increase than the 18,000 that private economists had expected, and it highlights the strains that the weak economy is putting on the labor market.

The report on jobless claims came a day ahead of a report on unemployment for April. Economists expect that report will show that the unemployment rate edged up to 5.2 percent, from 5.1 percent in March. The economy is expected to lose 70,000 jobs, for the fourth straight month of job losses.