US consumers struggled to make ends meet in August as incomes fell for the first time in nearly two years, while a surge in midwest manufacturing provided one bright spot.

Income slipped 0.1 per cent, the commerce department said, the first decline since October 2009 and contrasted with economists’ expectations for a 0.1 per cent advance.

That held consumer spending to a 0.2 per cent rise after increasing 0.7 per cent in July. Adjusted for inflation, spending was unchanged after a 0.4 per cent gain in July.

But the sting from the weak income report was softened by the solid factory activity in the midwest in September and news that consumers grew more optimistic as the month ended. – (Reuters)