US consumer spending increased solidly in July, pointing to strong economic growth early in the third quarter, while a measure of underlying inflation hit the Federal Reserve's 2 percent target for the third time this year.
Other data on Thursday showed an increase in new applications for unemployment benefits last week, but the underlying trend continued to point to a robust labor market. Strong domestic demand, rising inflation and a tightening jobs market likely will keep the US central bank on course to increase interest rates for a third time this year in September.
The Commerce Depart-ment said consumer spending, which accounts for more than two-thirds of US economic activity, rose 0.4 percent last month after advancing by the same margin in June. Households spent more at restaurants and on accommodation last month.