Consumer spending stalls in the US

US consumer spending unexpectedly stalled in April as households cut on purchases of cars and continued to boost savings, suggesting the economy was struggling to gain momentum early in the second quarter.

However, there are signs a rebound is under way, with other reports showing manufacturing activity picked up in May for the first time in seven months as construction spending surged in April to a near six and a half-year high.

Still, soft consumer spending and muted inflation pressures, after a price index for consumer spending in April recorded its smallest gain since late 2009 on an annual basis, suggest the Federal Reserve will probably not raise interest rates before the end of the year.