U.S. personal income grew at a slower pace during July as consumer spending surged.

The U.S. Commerce Department said today that personal income rose at a seasonally adjusted annual rate of 0.3%, after climbing an unrevised 0.5% in June.

July personal consumption advanced by 1%, matching a revised 1% increase the month before. June spending was originally seen up 0.8%.

Disposable personal income — income after taxes — rose 0.3%, following an unrevised 0.5% advance in June. Income after taxes and inflation was flat after going up 0.5% in June.

Spending on durable goods climbed 4.7% in July, after rising 4.2% in June. Car sales were strong in July a second straight month as motorists seized sharp price discounts by the auto industry.

Non-durable goods spending rose 0.6%, after increasing 0.7% in June. July spending on services advanced by 0.4%, after a 0.5% increase.

Personal saving as a percentage of disposable personal income was a negative 0.6%. That marked the weakest performance since monthly records began in 1959, Commerce said.

Meanwhile, U.S. manufacturing activity grew at a slower than expected pace in August. A report from the Institute for Supply Management released today said that the group’s index of manufacturing activity slipped to a reading of 53.6 in August, from 56.6 in July and 53.8 in June. Readings over 50 point to expansion in activity.

“While not as strong as in July, the PMI still indicates significant economic growth in both manufacturing and the overall economy,” said Norbert Ore, chairman on the ISM’s survey committee, in a release. But he added, “This month’s comments from supply managers indicate great concern over recent new highs in the energy commodities.”

The ISM said inflation pressures in the manufacturing sector remained grew stronger in August. The group said its prices index was 62.5; the index was at 48.5 in July.

The ISM said that its new orders index moved to 56.4, from July’s 60.6, while the production index hit 55.9, versus 61.2 the month before. Employment among U.S. manufacturers showed a modest slowing in the pace of hiring, at a reading of 52.6, after 53.2 in July and 49.9 in June.

Meanwhile, the ISM also said that its inventories index for August was 45.7, from July’s 47.5.

Separately, construction spending was flat during July as outlays rose on housing but took the biggest fall in six months for government building of roads, offices and other projects.

Total spending was unchanged at a seasonally adjusted annual rate of US$1.099 trillion, the U.S. Commerce Department said. Spending dropped by 0.6% in June; it was originally seen down 0.3%.

Also, initial jobless claims rose by 3,000 to a seasonally adjusted level of 320,000 in the week that ended August 27, the U.S. Labor Department said. The four-week average also climbed — to a four-week high of 316,750.