American incomes and spending contracted in November as recession took a heavy toll on the world's biggest economy, the Commerce Department said Wednesday.

In the first decline in four months, personal income contracted 0.2 percent in November, surprising analysts who had expected no change.

Consumption expenditures shrank 0.6 percent in the month before Christmas, its fifth consecutive decline, the department said.

But after adjusting for inflation and taxes, real disposable income in November increased 1.0 percent, a second consecutive large monthly rise, and real personal consumption expenditure rose 0.6 percent, the first monthly rise since May and the largest monthly increase since December 2006.

"Though the increase in real spending and income is encouraging, it is being driven by sharp declines in prices," said Ryan Sweet, a senior economist with Moody's Economy.com.

An accelerating decline in prices in recent months has stoked fresh concerns about deflation -- the pernicious downward spiral of falling prices and weakening growth that is difficult to counter.

"Household finances are still tight, and consumers are attempting to repair their balance sheets by saving more. The savings rate will trend higher, at the expense of spending," Sweet said.

Still, the break in the downward trend in real spending "implies a softer fourth quarter consumption decline than previously estimated, a bit of solace in a quarter of rapidly falling economic activity," said Peter Kretzmer, senior economist with Bank of America.

"We now estimate that consumer spending is falling at a 1.8 percent annualized pace this quarter (versus a drop of 3.8 percent in the third quarter)," he said.

Personal income, which tracks income from all sources, is the largest component of total income, comprising wages and salaries estimated using payrolls and earnings data.

According to the Commerce Department, personal income decreased 20.7 billion dollars or 0.2 percent in November while personal consumption expenditures decreased 56.1 billion dollars or 0.6 percent.

In October, personal income increased 11.3 billion dollars, or 0.1 percent, and personal consumption expenditures decreased 102.6 billion dollars, or 1.0 percent, based on revised estimates.

Private wage and salary disbursements decreased 8.7 billion dollars in November, compared with a decrease of 1.5 billion dollars in October, the department said.

The United States is facing prolonged recession after a housing mortgage crisis sparked financial turmoil across the globe and caused a severe economic downturn.

The Labor Department said separately Wednesday that new US weekly jobless claims rose by 30,000 over the past week to 586,000, in another sign of a weak employment picture.

The figure was higher than the 558,000 expected by private economists and indicates employment, one of the best indicators of economic momentum, continues to struggle.