Investing.com - U.S. consumer spending surged by the most in seven years in April, while core PCE prices gained in line with expectations, supporting the case for the Federal Reserve to raise interest rates in coming months, official data showed on Tuesday.
In a report, the Commerce Department said that personal spending climbed by a seasonally adjusted 1.0% last month, above expectations for a gain of 0.7%. Personal spending for March rose 0.1%.
Consumer spending is the single biggest source of U.S. economic growth, accounting for as much as two-thirds of economic activity.
Personal income, meanwhile, rose by a seasonally adjusted 0.4%, in line with forecasts and after rising 0.4% a month earlier.
Meanwhile, the core PCE price index inched up 0.2% last month, meeting expectations and after rising 0.1% in March. The core PCE price index rose at an annualized rate of 1.6%, matching estimates and after a 1.6% gain a month earlier.
The Federal Reserve uses core PCE as a tool to help determine whether to raise or lower interest rates, with the aim of keeping inflation at a rate of 2% or below.
EUR/USD was trading at 1.1149 from around 1.1150 ahead of the release of the data, GBP/USD was at 1.4636 from 1.4640 earlier, while USD/JPY was at 111.13 from 111.10 earlier.
The US dollar index, which tracks the greenback against a basket of six major rivals, was at 95.62, compared to 95.60 ahead of the report.
Meanwhile, U.S. stock futures pointed to a modestly higher open. The blue-chip Dow futures rose 40 points, or 0.23%, the S&P 500 futures tacked on 4 points, or 0.18%, while the tech-heavy Nasdaq 100 futures advanced 9 points, or 0.19%.
Elsewhere, in the commodities market, gold futures traded at $1,212.05 a troy ounce, compared to $1,213.05 ahead of the data, while crude oil traded at $49.55 a barrel from $49.60 earlier.