Consumer spending , incomes edge up in July . Glenn SomervillePER WASHINGTONLOC 1996-08-30 Consumer spending barely edged up in July , the Commerce DepartmentORG said Friday , as income growth slowed abruptly to the weakest pace in six months . Spending rose 0.2 percent to a seasonally adjusted annual rate of $ 5.15 trillion after dropping a revised 0.4 percent in June . Incomes from wages , salaries and all other sources gained 0.1 percent to a rate of $ 6.47 trillion after a 0.9 percent jump in June . Department officials said July 's slight gain in incomes was the weakest for any month since January , when they were flat . Wages and salaries came under pressure in July as a shorter average workweek and lower hourly earnings cut into paychecks . The department said wages and salaries decreased by $ 6.9 billion in July after climbing $ 45 billion in June . " In July , average weekly hours and average hourly earnings declined , more than offsetting the effect of an increase in employment , " CommerceORG said . But more money went into savings accounts , as savings held at 5.3 cents out of each dollar earned in both June and July . That was the highest savings rate since October last year , when 5.5 cents out of each dollar earned was being saved . The generally lackluster report on spending and incomes in July had been expected . At the same time , the department said in a separate report that new orders received by U.S.LOC factories climbed strongly in July , with widespread gains across most major categories . Orders increased 1.8 percent to a seasonally adjusted $ 317.6 billion , significantly stronger than the 1 percent rise forecast by Wall StreetLOC economists . That followed a revised 0.7 percent decline in June orders . Commerce said previously that spending at retail stores was up only 0.1 percent in July , partly because of softer sales of new cars and light trucks . In addition , the Labour DepartmentORG 's July employment report had foreshadowed the muted income growth . It showed average hourly earnings fell in July by 0.2 percent to $ 11.00 and the average workweek shortened to 34.3 hours from 34.7 in June . Gains in personal income , which includes wages and salaries as well as income from sources such as dividends , interest and businesses , are essential for funding consumer purchases , which fuel two-thirds of national economic activity . Spending on all types of durable goods , which includes cars , fell to an annual rate of $ 626.3 billion in July from $ 633.6 billion in June . But spending on nondurable products increased moderately to a rate of $ 1.55 trillion from $ 1.54 trillion in June , while spending for services was up to $ 2.97 trillion in July from $ 2.96 trillion . Payrolls of manufacturing companies rose in July by $ 2.3 billion to an annual rate of $ 678 billion .