U.S. Personal Income Growth Eases, While PCE Picks Up

Personal income increased 0.2% (2.8% y/y) in April after 0.4% March, which was unrevised from the initial report last month and modestly weaker than consensus expectations for 0.3%. The April rise included a 0.2% rise (3.2% y/y) in wages and salaries, a second month of slowing after some improvement in the winter. Wages and salaries were also revised somewhat beginning in Q4 2011, due to a regular quarterly updating of the Labor Department source data. Among other income categories, rental income surged 1.0% (14.2% y/y), a tenth consecutive monthly gain of 1% or more. Proprietors' income increased 0.4% (3.1% y/y). Low interest rates meant that interest income was flat in April, following three months of 0.6% increases; the year-on-year movement was down 1.8%. In contrast, dividend income remained strong, rising 1.0% in April and 6.5% from a year ago.

Personal consumption expenditures picked up to a 0.3% increase in April from an upward revised 0.2% rise in March, which was originally reported at 0.1%; April's year/year gain was 4.0%. The April number was in line with consensus forecasts. Durable goods purchases rose 0.6%, resuming growth after a 1.4% decrease in March. The swing was led by a renewed increase in motor vehicles; other major durables, including home furnishings and recreational goods, declined or slowed in April from March. Spending on nondurable goods fell 0.2% in April after rising 0.9% in March; this swing owed mainly to declining gasoline prices and a lower volume of clothing purchases. Outlays for services increased 0.4% (+3.6% y/y) following 0.3% in April; expenditures on housing had an upswing of 0.9% after their 0.2% decrease in March, while recreational services weakened. Food services (i.e., mostly restaurant meals) and accommodations inched up 0.1% in April, but they had surged 1.1% in March.

The PCE chain price index was flat in April after a 0.2% increase in March; it is up 1.8% from a year ago. The April flattening came mainly from a decline in energy goods and services of 1.8%; those prices are now down 0.4% from a year earlier. The core PCE price index was also a bit slower in April, with a 0.1% increase following March's 0.2%; it is 1.9% above a year ago. The flat price index means that the real value of PCE in April also rose, as did the nominal, by 0.3%, picking up from a flat performance in March, revised from 0.1% reported before.

The personal saving rate was 3.4% in April, down from March's 3.5%, revised down from 3.8% reported last month, reflecting the upward revision to March spending. A year ago, the saving rate was 4.8%.

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