The Bureau of Economic Analysis reported that consumer spending slightly in May, its first decrease since November. Looking specifically at manufactured goods, durable goods expenditures declined from $3,792.0 billion in April to $3,765.8 billion in May. Likewise, nondurable goods spending fell from $1,222.5 billion to $1,217.9 billion. It was the third consecutive monthly decline for both. Overall personal consumption remains 3.5 percent higher than it was on May 2011, however.
Meanwhile, personal income increased by 0.2 percent, which is the same rate as observed in April. Manufacturing wages and salaries fell, though, declining from $717.5 billion to $713.0 billion. This is essentially the level observed in January, so the gains since then were wiped out. Given recent weaknesses in the manufacturing sector, though, it is not surprising.
Consumers have benefited from lower energy costs. The price index related to personal consumption expenditures declined 0.2 percent in May, with year-over-year gains down to 1.5 percent. Just six months ago, the year-over-year increase was 2.7 percent. Since then, petroleum costs soared and then declined significantly.
Breaking the price index down by sector, durable goods prices have declined by 1.2 percent, nondurables rose by 1.3 percent, and services increased by 2 percent over the past year. Energy costs are now 3.8 percent below where they stood last year.
Chad Moutray is chief economist, National Association of Manufacturers.