U.S. household spending bounced back in June as consumers shelled out more on services at the start of the summer, but a current upswing in Covid-19 cases related to the Delta variant is injecting uncertainty into the economic outlook.

Personal-consumption expenditures—a measure of household spending on goods and services—increased a seasonally adjusted 1% last month, the Commerce Department reported Friday. That followed a downwardly revised 0.1% drop in May, when consumers pulled back on purchases of goods but boosted spending on services.

The spending report reflects that the “economy is still very much on track,” said Scott Brown, chief economist at Raymond James Financial. He said any potential impact of the Delta variant’s spread is difficult to predict, but added it would pose a significant risk to economic growth if consumers curtail activities such as traveling and dining out.

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