US shoppers unexpectedly cut spending in January as purchases of big-ticket items such as cars took the steepest dive in 13 years, government figures showed Monday.
Consumer spending -- accounting for two-thirds of US economic activity -- eased 0.1 percent in January after surging 1 percent in a frenzied December, seasonally adjusted figures showed.
It was the first decline in consumer expenditures since September last year, but analysts said the underlying data -- after stripping away a slump in car buying -- were not too bad.
In fact, spending was healthy in light of a Conference Board survey showing consumer confidence, battered by fears of Iraqi war and terrorism, slumped to a near 10-year low in February.
On the other hand, industry figures showed a slower growth pace of manufacturing activity.
"While total consumer demand did ease a bit in January, it was entirely because of a sharp slowdown in vehicle sales," said Joel Naroff, president of Naroff Economic Advisors.
Spending on durable goods -- items expected to last at least three years -- plummeted 5.7 percent, the largest decline since February 1990. Americans boosted spending on other goods 1.3 percent. Expenditures on services climbed 0.4 percent.
"Given the sharp falloff in vehicle sales, the modest decline in overall spending was actually very good news," Naroff said.
Industry figures have shown a slump in car sales following a car-buying boom driven by heavy discounting and financing offers.
"With uncertainties about the war and soaring energy prices playing on people's minds and pocketbooks, the prospect is for spending to be moderate at best over the next few months," Naroff said.
* Spending on durable goods plummeted 5.7 percent, the largest fall since 1990.
* Americans boosted spending on other goods 1.3 percent.
* Expenditures on services climbed 0.4 percent.
"But at least consumers are still in there battling. That is more than you can say for businesses and investment," he said.
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