·
A strong 0.6% gain in wage &
salary disbursements raised U.S. personal income by 0.4% in October. The
increase in wages offset declines in proprietors' and rental income
while the latest rise in total income followed an unrevised 1.7% surge
in September, though income in August was revised down slightly.
Consensus expectations had been for 0.5% income growth in October.
· The effects of Hurricanes Katrina, Rita & Wilma are reflected in the last three months' income figures. A description of these effects can be found here.
· Wages & salary income doubled the previous months' rise and increased 0.6% (5.0% y/y) on the strength of a 1.4% (3.2% y/y) surge in factory sector wages. Service sector wages rose 0.6% (5.5% y/y) after an upwardly revised 0.5% September increase and government wages rose 0.2% (3.4% y/y).
· Disposable personal income rose 0.3% (4.2% y/y) following the unrevised 1.9% jump in September. Adjusted for the 0.1% rise in prices, take home pay rose 0.2% (0.9% y/y).
· The PCE chain price index rose a modest 0.1% in October, held back by lower gasoline prices which caused nondurable prices to fall 0.4% (+5.1% y/y). Less food & energy the modest 0.1% increase additionally reflected lower light vehicle prices. Services price rose 0.4% (3.2% y/y) for the second month.
· Personal consumption expenditures rose an expected, modest 0.2%. Light vehicle sales fell for the third consecutive month and lowered spending on durables by 2.5% (-2.0% y/y). Nondurables outlays rose 0.6% (9.1% y/y) but adjusted for the y/y gain in prices spending on nondurables rose a lesser 3.8% y/y. Services spending rose 0.5% (6.2% y/y).