ECONOMY

Consumer spending rises as incomes grow

Consumer purchases climbed in September by the most in three months as incomes grew, signaling momentum in the biggest part of the U.S. economy.

The 0.5 percent advance in spending, which accounts for about 70 percent of the economy, followed a 0.1 percent decline the prior month that was revised lower, a Commerce Department report showed Monday.

While the results indicate a solid handoff into the final quarter of 2016, disposable income, or the inflation-adjusted money left over after taxes, was little changed for a second month, indicating wages will need to pick up to boost spending more. Such support is needed to drive faster economic growth, which picked up last quarter despite softer household purchases.

Nominal incomes rose 0.3 percent after a 0.2 percent gain. Inflation-adjusted spending rose 0.3 percent in September after a 0.2 percent decline. The advance in purchases included a 1.8 percent jump in durable goods.

The September figures provide more perspective on how consumer spending was doing toward the end of the quarter. Household purchases grew 2.1 percent, or about half the pace as in the previous three-month period. The savings rate decreased to 5.7 percent from 5.8 percent. Wages and salaries rose 0.3 percent.

The report’s price gauge based on the personal consumption expenditures index, the Federal Reserve’s preferred measure of inflation, rose 1.2 percent from a year earlier, the most since November 2014. Inflation hasn’t reached the Fed’s 2 percent goal since 2012.

The core price measure, which excludes food and fuel, increased 1.7 percent from September 2015.

— Bloomberg News

OIL aND gas

GE will create firm with Baker Hughes

General Electric said Monday it would merge its oil and gas business with Baker Hughes, creating the world’s second-largest oil field services provider as competition heats up to supply more-efficient products and services to the energy industry after several years of low crude prices.

The deal to create a company with $32 billion in annual revenue will combine GE’s strengths in making equipment long-prized by oil producers with Baker Hughes’s expertise in drilling and fracking new wells.

GE is the world’s largest oil field equipment maker, supplying blowout preventers, pumps and compressors used in exploration and production. GE also has invested heavily in large data processing services just as the oil industry eyes its potential to boost oil recovery.

Baker Hughes, by contrast, is seen as one of the world leaders in horizontal drilling, chemicals used to frack and other services key to oil production.

The new company will vault Baker Hughes’s market share ahead of rival Halliburton, which tried and failed to buy Baker last May, and also compete heavily with Schlumberger NV, the world’s largest oil field service provider, for customers.

GE will own 62.5 percent of the new publicly-traded company. The deal is expected to close in mid-2017.

— Reuters

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