US spending and income up in May

The US economic recovery appeared to have remained intact in May, based on Monday's data. From Reuters:

U.S. consumer spending rose moderately in May, even as savings touched the highest level in eight months, indicating a tepid economic recovery was still intact...

Spending increased 0.2 percent after going flat in April, the Commerce Department said. That was a touch above market expectations for 0.1 percent. Adjusted for inflation, spending was up 0.3 percent...

Last month, an increase in jobs and longer working hours helped lift incomes. Incomes rose 0.4 percent after gaining 0.5 percent in April, the Commerce Department said.

Adjusted for inflation and taxes, incomes climbed 0.5 percent following a 0.6 percent increase the prior month...

The report on spending showed inflation pressures remain muted. The personal consumption expenditures price index was flat for a second month in a row, while the core price index, which excludes food and energy costs, rose 0.2 percent...

Separately, a measure of national economic activity slipped last month, but remained above levels historically linked to a mature economic recovery following a recession.

The Chicago Federal Reserve Bank said its national activity index fell to 0.21 from 0.25 in April. The three-month moving average indicated limited inflationary pressure over the coming year, the Chicago Fed said.

Still, noting the decline in the growth rate of the ECRI Weekly Leading Index to -6.9 percent recently, John Hussman says that "the US economy appears headed into a second leg of an unusually challenging downturn".

Meanwhile, in the euro area, the ECB reported that loans to the private sector rose 0.2 percent in May from a year earlier after increasing 0.1 percent in April but M3 money supply declined 0.2 percent. Markets, though, remain focused on the sovereign debt issue. From Bloomberg on Monday:

German bunds rose, sending the yield to the lowest in more than two weeks, as investors demanded higher yields to hold all but the safest European government securities amid concern the region’s debt crisis may deepen.

Italian, Spanish and Greek bonds fell after European auctions for a total of 10.7 billion euros ($13 billion) of debt drew weaker demand. The difference in yield between German 10- and 2-year bonds was at the lowest level since December as a report today showed annual inflation in Europe’s largest economy slowed...

US Treasuries were up too, pushing the 10-year yield down to 3.02 percent.