US consumer spending, which accounts for more than two-thirds of overall economic activity in the US, rose by 0.7% in October compared with September.
The figures from the Commerce Department were more than the 0.5% rise expected by analysts and boosted hopes for a strong recovery.
According to the Commerce Department, consumers increased their spending during the month on both durable manufactured goods, such as cars and household appliances, and non-durables, such as food and clothes.
October’s rise followed the fall of 0.6% in September which reflected the end of the Government’s “cash for clunkers” scheme.
Tim Ghriskey, chief investment officer at Solaris Asset Management, described the data as “positive“ and said: “Certainly everybody is looking for the consumer to begin to step up here a little bit in the economy.”
However, the news comes as analysts are fearful of a fragile recovery within the US and the economy could slump again due to high unemployment, which knocks consumer confidence and spending.
Weak spending in the build-up to Christmas could be a worry for the world’s largest economy, according to many.
In related news, yesterday the Commerce Department revealed that the US economy grew at a far slower rate in the third quarter than previous estimates showed.
The US economy expanded by 2.8% between the July and September period, rather than the 3.5% previously reported and just under the 2.9% analysts had expected.