Personal income rose 0.6 percent in November, its fastest pace since February, according to the Bureau of Economic Analysis. Wages had declined in October, with slowdowns from Hurricane Sandy putting a dent in that month’s earnings data. Wages were higher in November, including those from manufacturers. Manufacturing wages and salaries rose from $746.4 billion in October to $750.0 billion in November. This puts manufacturing earnings just below what they were in July ($753.9 billion), its recent peak.
At the same time, personal spending recovered from lower levels in October. Consumer spending rose 0.4 percent. This was good news for durable goods manufacturers, which accounted for the bulk of the increase with purchases of these items up 2.7 percent for the month. Nondurable goods spending was down 1.0 percent, however, declining for the second month in a row.
Lower energy costs are providing a boost to Americans pocketbooks. Energy goods cost 4.4 percent less in November than in October. The implied price index from this data was unchanged at the core level, which excluded food and energy prices.
With income outstripping spending growth, the savings rate rose from 3.4 percent to 3.6 percent. The longer-term trend has been for the savings rate to move lower, as it was 4.1 percent in June and as high as high as 5.5 percent as recently as January 2011.
These data reflect improvements in personal income and consumer spending from a weakened October, when Hurricane Sandy weighed heavily on the data. That rebound is a good sign that income and spending have returned to moderate growth. Personal income has risen 4.1 percent year-over-year, with spending up 3.5 percent over the same time period.
Chad Moutray is chief economist, National Association of Manufacturers.