U.S. Personal Income Up Moderately

Personal income grew a moderate 0.4% last month following the 0.2% uptick in July that was revised slightly up. Consensus expectations had been for a 0.5% increase.

Wages & salaries rose 0.4% (+4.6% y/y) and earlier months' figures were revised higher. Manufacturing wages jumped 0.8% (2.6% y/y) while wages in private service producing industries rose 0.3% (5.4% y/y).

Personal disposable income rose 0.4% (3.7% y/y) and inflation adjusted disposable income rose the same 0.4% (1.6% y/y).

"Labor's Share" from the Federal Reserve Bank of St. Louis can be found here.

Consumer spending was unchanged following the upwardly revised 1.1% jump in July. Durables purchases fell due to lower light vehicle sales. Purchases of non-durable goods and services both rose a modest 0.2%.

The PCE chain price index fell slightly for the second consecutive month. Prices less food & energy also fell (+1.4% y/y) as durables prices (-0.5% m/m, -2.1% y/y) continued lower. Services prices rose just 0.1% (2.5% y/y).

The Chicago Purchasing Managers Business Barometer for September recovered just over half of the prior month's decline with a 4.0 point gain to 61.3. Consensus expectations had been for a lesser rise to 57.5.

During the last ten years there has been a 73% correlation between the level of the Chicago Business Barometer and the three month change in factory sector industrial output. That correlation has risen to 85% during the last five years.

The new orders index jumped to 68.7, recovering all of the 10.7 drop in August. The employment index at 53.9, added 2.8 points to the 5.5 rise. During the last twenty years there has been an 81% correlation between the level of this employment index and the three month change in factory sector employment.

The index of prices paid remained quite firm at 86.4. During the last ten years there has been a 77% correlation between the Chicago price index and the y/y change in the "core" intermediate goods PPI.

The National Index of Help-Wanted Advertising published by the Conference Board remained at 37 in August after the decline in July to the lowest level of the year.

During the last ten years there has been a 91% correlation between the level of help-wanted advertising and the year-to-year change in non-farm payrolls. The stall in help wanted indicates that most, if not all, of the y/y improvement in non-farm payroll growth has been due to fewer job losses, not improved hiring.

The proportion of labor markets with rising want-ad volume rose to 49% from a depressed 41% in July.

The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.

"Why Did the Average Duration of Unemployment Become So Much Longer?" from the Federal Reserve Bank of New York is available here.

Initial claims for unemployment insurance surged another 18,000 last week to 369,000 after a 15,000 gain the prior week. Consensus expectations had been for 335,000 claims. Prior years' figures were slightly revised.

The US Labor Department indicated that last week's claims number primarily reflected hurricanes Charley, Frances and Ivan. The largest increase in initial claims for the week ending Sept. 18 was in Florida (+8,797).

The 4-week moving average of initial claims rose to 343,500 (-14.2% y/y). During the last ten years there has been an 81% (negative) correlation between the monthly average of initial claims and the y/y change in payroll employment.

Continuing claims for unemployment insurance fell 3,000.

The insured rate of unemployment remained at 2.3% where it has hovered since the end of April.