The U.S. consumer seems to be finally slowing his spending, according to the latest data.

U.S. personal incomes rose by 0.3% in May, which was more or less as expected. “The moderate growth in personal income was fed by a 0.4% gain in wages and salaries, the strongest since last December,” says RBC Financial. “Personal consumption expenditures, however, fell by 0.1%, which left the saving rate at 3.1%. This is a slight improvement from April and not necessarily a bad thing.”

BMO Nesbitt Burns says, “The inevitable rise in the U.S. savings rate and reduction in spending growth finally appear to be starting. Real outlays were flat in May after tepid increases in consumer spending in March and April. Lower tax bills had been propping up spending. That force is starting to fade and the slowdown in disposable income growth could be a bigger factor in the second half of the year.”

RBC says that the spending figures may disappoint financial markets somewhat “since the consensus was for flat consumer spending. On the positive side of the ledger, however, consumer inflation was notably absent last month. In fact, the price index for personal consumption expenditures fell by 0.1%. On a year-over-year basis, the PCE price index is up by just 1% (1.6% excluding food and energy).”

“The 1.8% growth rate for real disposable income and the 0.9% growth rate for real spending in the last three months could be a critical signal that the underlying demand trend in the U.S. is fading. Some other areas will take up a bit of slack, but lackluster growth during the second half is a reasonable expectation,” warns BMO.

RBC also notes that the final June reading of the University of Michigan’s consumer sentiment survey came in at 92.4. “The large decline in the index’s preliminary June reading to 90.8 from 96.9, contributed to weakening financial markets two weeks ago. Today’s final reading – 92.4 – moderates that decline somewhat but is not likely to have a significant impact on markets as the trend remains unchanged.”