Oct. 31 (Bloomberg) -- U.S. personal spending may have slipped in September for the first time in a year as auto sales fell from a near-record pace, economists said ahead of a government report today. Personal spending likely fell 0.1 percent after a rise of 0.8 percent in August, based on the median estimate of 66 economists in a Bloomberg News survey. Personal spending accounts for about 70 percent of the economy and hasn't declined since a 0.4 percent drop in September 2002. The Commerce Department issues its report at 8:30 a.m. in Washington. The U.S. economy expanded at a 7.2 percent annual rate from July through September, the fastest in almost two decades, the Commerce Department said yesterday in Washington. Consumer spending grew at a 6.6 percent pace, the quickest since the third quarter of 1997, helping to power the growth surge. ``The spending splurge that people were on can't be sustained, but the consumer will still make a contribution to growth,'' said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh. ``We'll see more support to the economy from business spending so that the economy isn't riding solely on the shoulders of the American consumer.'' Incomes in September may have expanded 0.2 percent, the same pace as in August, according to the survey median. In other reports today, the University of Michigan may report that its national consumer sentiment index rose to 89.5 in its final October reading from September's 87.7, according to the median of forecasts. The Michigan report is set for 9:50 a.m. Washington time.
Chicago Factory Index
Chicago purchasing managers may report that their regional factory index rose to 56 in October from 51.2 the month before, according to a Bloomberg News survey. The Chicago region has the greatest concentration of factory jobs in the U.S. The industry groups' report is scheduled for 10 a.m. Washington time. The economy's growth may ease to 3.8 percent in the fourth quarter and through the first nine months of 2004, based on the median estimate of 58 economists surveyed by Bloomberg News from Sept. 26 to Oct. 3. Most of the third-quarter spending surge came in July and August, when many households received tax rebates or took cash out of home equity through mortgage refinancing at rates close to record lows. Retail purchases excluding those at auto dealers increased 0.3 percent to $244 billion in September, following a 1.2 percent gain in August, the Commerce Department said earlier this month. Including vehicles, sales fell 0.2 percent last month. Cars and light trucks sold at a seasonally adjusted annualized rate of 16.7 million in September, down from 19 million in August, the fastest pace since October 2001.
Ford Incentives
Automakers have been using discounts and other incentives to attract customers. That has meant higher unit sales and slower revenue growth for some. Ford Motor Co., the world's second-largest automaker behind General Motors Corp., led the industry with spending of $4,388 a vehicle on rebates and loan discounts in September, up 3 percent from August, according to CNW Marketing Research Inc. In other industries, business may have to increase investment in equipment and production after the surge in third- quarter consumer demand drained inventories. That would help make up for any slowdown in consumer spending, said Peter Kretzmer, senior economist at Banc of America Securities.
``The ability of the economy to maintain momentum will depend to a large extent on the pace of business investment spending, including inventory building,'' Kretzmer said. Manpower Inc. Chief Executive Jeffrey Joerres said companies are beginning to hire light-industrial and manufacturing workers. Milwaukee-based Manpower is the world's second-largest temporary- staffing company, behind Swiss-based Adecco SA. ``The job market is getting better,'' Joerres said in a televised interview with Bloomberg News. ``In the South and Midwest, we're seeing the strongest recovery in the U.S. in basic manufacturing, where inventories are very low.'' //www.bloomberg.com