U.S. Personal Income, Outlays & Savings Firm

Personal income gained 0.3% during January (4.1% y/y) after little change in December. The gain beat expectations for a 0.2% rise in the Action Economics Forecast Survey. Disposable personal income increased 0.4% (4.0% y/y). Wages & salaries advanced 0.2% and the 3.6% year-to-year increase was improved. To the upside, transfer receipts jumped 1.2% (3.2% y/y), rental earnings rose 0.9% (7.9% y/y) and proprietors income gained 0.3% (4.7% y/y). Working lower were dividend income by 0.4% (+17.2% y/y) and interest income by 0.3% (+1.1 y/y). Adjusted for price inflation disposable income recovered 0.3% (-2.8% y/y).

Personal consumption expenditures matched expectations and edged 0.1% higher (3.5% y/y) after a 0.1% December uptick. Late-2013 outlay levels were revised sharply lower. Motor vehicle purchases slipped 0.1% (-0.3% y/y) after a hefty 4.7% December drop while spending on furnishings & household equipment slipped 0.2% (+1.4% y/y). Clothing purchases were off 1.2% (+0.1% y/y). Gasoline expenditures plunged 3.3% (+2.9% y/y) due to lower prices & volumes. Services outlays jumped 0.9% (4.1% y/y) led by a 1.6% rise (4.7% y/y) in health care spending. Adjusted for inflation, PCE gained 0.3% (2.2% y/y).

The personal savings rate held steady at 4.3% but earlier figures were raised with the revised spending levels. Nevertheless, the savings rate remained close to its lowest since January 2008. The total amount of personal saving has been trending lower since 2009.

The PCE chain price index ticked up 0.1% (1.2% y/y) in January. The price index excluding food & energy also rose a steady 0.1% and 1.1% y/y, the slowest annual increase since early-2011. Durable goods prices slipped 0.1% (-2.2% y/y) while nondurable goods prices were unchanged (0.7% y/y). Prices for services gained 0.2% (1.9% y/y).

The personal income & consumption figures are available in Haver's USECON and USNA databases. The consensus expectation figure is in the AS1REPNA database.

Personal Income & Outlays (%)	Jan	Dec	Nov	Y/Y	2013	2012	2011
Personal Income	0.3	-0.0	0.3	4.1	2.8	4.2	6.1
Wages & Salaries	0.2	-0.1	0.6	3.6	3.1	4.3	4.1
Disposable Personal Income	0.4	-0.1	0.2	4.0	1.9	3.9	4.8
Personal Consumption Expenditures	0.4	0.1	0.5	3.5	3.1	4.1	5.0
Personal Saving Rate	4.3	4.3	4.4	3.6 (Jan '13)	4.5	5.6	5.7
PCE Chain Price Index	0.1	0.2	0.1	1.2	1.1	1.8	2.4
Less Food & Energy	0.1	0.1	0.1	1.1	1.2	1.8	1.4
Real Disposable Income	0.3	-0.2	0.1	2.8	0.7	2.0	2.4
Real Personal Consumption Expenditures	0.3	-0.1	0.4	2.2	2.0	2.2	2.5

U.S. ISM Index Begins to Recover
by Tom Moeller  March 4, 2014

The factory sector began to bounce back last month following heavy winter snowfalls. The Composite Index of Manufacturing Sector Activity from the Institute for Supply Management improved to 53.2 during February from 51.3 in January. The latest reading beat expectations for little change at 51.5 as measured by the Action Economics Survey. Any figure above 50 indicates an increasing level of activity in the factory sector. During the last ten years, there has been a 76% correlation between the ISM index and the q/q change in real GDP.

A bounce-back in new orders (54.5), inventories (52.5) and supplier deliveries (slower) prompted the recovery in last month's factory sector activity. Offsetting these gains was a lower reading for production (48.2) and an unchanged employment figure (52.3). During the last ten years there has been an 88% correlation between the employment index and the m/m change in factory payrolls. The new export orders index fell to 53.5, the lowest reading since September, while the order backlog reading made up its January shortfall. The imports index was unchanged at 53.5.

The prices paid index series indicated further improvement in pricing power with a rise to 60.5, the highest level since February of last year. Twenty eight percent of firms raised prices while seven percent lowered them. During the last ten years there has been a 67% correlation between the index and the m/m change in the intermediate producer price index.

The figures from the Institute For Supply Management (ISM) are diffusion indexes and can be found in Haver's USECON database. The expectations number is in the AS1REPNA database.

ISM Mfg	Feb	Jan	Dec	Feb'13	2013	2012	2011
Composite Index	53.2	51.3	56.5	53.1	53.9	51.8	55.2
New Orders	54.5	51.2	64.4	55.7	57.2	53.1	56.4
Production	48.2	54.8	61.7	54.5	57.7	53.8	57.4
Employment	52.3	52.3	55.8	52.2	53.2	53.8	57.4
Supplier Deliveries	58.5	54.3	53.7	51.5	51.9	50.0	54.7
Inventories	52.5	44.0	47.0	51.5	49.4	48.2	50.1
Prices Paid Index (NSA)	60.0	60.5	53.5	61.5	53.8	53.2	65.2