Consumer spending in the US rose by 0.4% in July, a faster rate than previously expected. Shoppers saved less of what they earned than in previous months.

Personal income grew by only 0.2%. Economists had expectations that both figures would increase by 0.3%.

A regional manufacturing survey in Texas, meanwhile, showed absolutely no growth in August, confirming a nationwide slowdown in industrial output.

Wall Street was underwhelmed with the new information, and the Dow Jones dropped about 0.7% by midday.

The consumer spending growth was the fastest since March, though total spending remains well below pre-recession highs.

The fact that personal income grew so slowly means that the savings rate in the US, which is the percentage of income that households choose not to spend, fell to 5.9% from 6.2% in June.

The US savings rate was close to zero when the global recession hit last year, signalling that households were spending almost all of their income.

It rose during the recession, which resulted in a big fall in consumer spending.

A lot of economists expect the savings rate to remain at 6% or even higher rise. Historically, the savings rate has been even higher at 8%-12%.