–Pvt Wages +$4.7b vs +$9.3b July; Core PCE Px +1.6% YOY; Modest Growth
By Joseph Plocek
WASHINGTON (MNI) – The U.S. August Personal Income report was about
as expected, suggesting modest real growth as sales gains got deflated.
August Personal Income printed +0.1%, Personal Consumption
Expenditures +0.5%, and Core PCE prices +0.1% for +1.6% over the year.
Incomes were hurt by several factors and this appears to be the
primary factor holding back spending. Private wages posted +$4.7 billion
after +$9.3 billion in July as goods-producing payrolls decreased on
the back of manufacturing contraction. Services and government wages
rose.
Transfer payments from the government and receipts on assets
(personal interest and dividends) fell, another reason income was slow.
Real disposable income declined 0.3% as a result, a result equaled
several times in 2011 but the largest drop since February.
Wage supplements, proprietors’ income and rents rose, but these are
not growing fast enough to alter the weak wage picture.
Retail sales data showed people kept spending in nominal dollar
terms (the +0.5% consumption gain was the largest since February), but
real PCE printed just +0.1%. Rising food costs and real services
spending printing -0.1% were reasons real spending was soft. Still, real
spending on durable goods was +0.5% and on nondurables +0.3%.
Savings also suffered from slowing incomes, falling to its lowest
level since April at $444.8 billion. This put the saving rate at 3.7%,
its lowest since spring. Savings was 4.1% in July and 4.4% in June.
Real PCE at +0.1% means the July-August average is about 1.5% above
Q2, suggesting additional modest GDP growth in Q3.
**Market News International Washington Bureau: (202)371-2121**
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