WASHINGTON — Consumers ended last year by cautiously holding on to their cash, spending slightly less in December even as their incomes rose for the ninth consecutive month, the Commerce Department said Monday.
Consumer spending declined by $700 million, or less than 0.1 percent, to $12.5 trillion. The figure was down from an upwardly revised 0.5 percent increase in November.
Personal income rose 0.3 percent in December, the same as in the previous month.
Consumers opted to save more of their extra earnings. The share of disposable income that was saved increased to 5.5 percent in December, from 5.3 percent the previous month, matching a three-year high.
“Consumer spending ended the fourth quarter on a low note,” said Chris G. Christopher Jr., director of consumer economics at IHS Global Insight.
“In November, consumers came out swinging _ they saved less and spent more,” he said. “In December, consumers took a breather and consumer spending was flat.”
Christopher said she expected spending to pick up in the first quarter of this year.
Consumer spending accounts for about two-thirds of U.S. economic activity, so saving results in slower growth.
There also were mixed signs Monday for the higher-paying construction and manufacturing sectors as a survey of leading economists showed the risk of a U.S. recession rising.
Construction spending rose slightly in December, increasing 0.1 percent from the previous month, the Commerce Department said. The growth was weak, but an improvement over a 0.6 percent decline in November.
In addition, a private report indicated that the U.S. manufacturing sector contracted for a fourth consecutive month in January.
The Institute of Supply Management’s purchasing managers index ticked up slightly to a still-weak 48.2, from 48 the previous month. A reading below 50 indicates that the sector is contracting.
Manufacturers have been hurt by the strong dollar, which increases the costs of U.S. goods abroad. And low oil prices have hurt energy production companies.
Overall economic growth slowed sharply in the last three months of 2015, the Commerce Department said last week.
The U.S. economy expanded at just a 0.7 percent annual pace in the fourth quarter, largely because of declining exports and business investment.
Consumer spending for the quarter increased 2.2 percent, down from 3 percent in the previous quarter.
Federal Reserve policymakers are watching economic data closely to determine if they should raise a key interest rate at their March meeting. The Fed nudged up the rate in December for the first time in nearly a decade in a vote of confidence for the recovery from the Great Recession.
A key concern of Fed officials is stubbornly low inflation, and Monday’s report showed the problem worsened in December.
The price index for personal consumption expenditures — the Fed’s preferred inflation measure — declined 0.1 percent after rising 0.1 percent the previous.