Consistent with the third quarter’s performance, consumer spending growth accelerated in September, but income growth slowed, according to a report from Cox Automotive.

Personal consumption was the key driver as it accelerated to growth of 4.0% from 0.8%. Spending on goods reaccelerated to a robust 4.8% growth from 0.5% in the prior quarter, while spending on services accelerated to growth of 3.6%.

Increasing inventories combined with a turn-around in residential investment resulted in an 8.4% increase in private domestic investment. Government spending also accelerated. Imports rose more than exports, resulting in the only drag on growth in the quarter. With the increase in Q3, real GDP was up 2.9% from last year.

Consumer spending accelerated in September and was stronger than expected. Personal income growth slowed to a 0.3% gain from 0.4% previously and was weaker than expected. Employee compensation growth decelerated to 0.4% from 0.5% in August. Government transfer payments declined 0.2% after falling 0.1% in August, as unemployment compensation declined a larger 1.2%. Proprietors’ income increased 0.4%, down from an upwardly revised 0.6% in August. Personal income from dividends was stable, and interest income growth remained strong.

Spending on goods was flat, while spending on services accelerated. Spending on durable goods increased by 1.0% in September, while spending on nondurable goods increased by 0.5%, and spending on services increased by 0.8%. Spending on motor vehicles and parts increased 1.9% following an upwardly revised 0.8% decline in August.

PCE measures of inflation are at the lowest year-over-year levels since the spring of 2021. Factoring in inflation, real spending increased 0.4% in September, accelerating from 0.1% in August.