–US Sept Personal Income +0.9% After -2.5% in August, Savings Rate 14.3%
–Nominal PCE +1.4%, Real PCE +1.2%; Core Prices +0.2%
–Chicago PMI Slips to Still-Strong 61.1 in October from 64.2 in September
–Oct Michigan Sentiment Index Revised Up to 81.1, Vs 80.4 in September
By Kevin Kastner
WASHINGTON (MaceNews) – Personal income rebounded in September, reflecting a further increase in wages and salaries, a jump in proprietors’ income and further payments under the Lost Wages Supplemental Payments program. These data were incorporated into Thursday’s advance reading for third quarter GDP.
Personal income rose by 0.9% in September, well ahead of the 0.3% increase expected, after a 2.5% decline in August due to the expiration of most Federal unemployment benefits.
The further increase in nonfarm payrolls and a rising hourly earnings in September helped lift wages and salaries by 0.8% after a 1.4% August increase.
Current transfer receipts fell by only $5.7 billion after a $725.7 billion decrease in August. The regular unemployment insurance category, which reflects that state portion of jobless benefits, fell by $266.6 billion in the month.
However, the “other” transfer payments category, which includes the government stimulus measures, rose by $247.7 billion after a $54.6 billion decrease in August. The Trump Administration’s Lost Wages Supplemental Payments program paid an additional $300 per week to workers through August and the first part of September after the $600 per week program expired at the end of July. The money was diverted from a disaster relief fund from FEMA.
Proprietors’ income rebounded by $298.9 billion after a $194.1 billion decrease in the previous month, as retail sales surged. Rental income also grew, rising by $9.1 billion after an August decline.
Return on assets fell by $46.7 billion, with both dividend income and interest income down.
The savings rate fell to 14.3% in September from 14.6% in August, as consumer spending moved higher.
On the spending side in September, current-dollar personal consumption expenditures rose by 1.4%, above the 1.0% gain expected and following a 1.0% increase in the previous month.
Goods PCE rose by 2.0% on an increase in motor vehicle sales, while services PCE rose by 1.1% on healthcare and recreation services.
After adjustment for a 0.2% increase in the PCE price index, real PCE rose by 1.2% following a 0.7% increase in August.
Core PCE prices also rose by 0.2% in September after a 0.3% increase in August. The year/year rate accelerated modestly to 1.5% from 1.4% in August.
Released at the same time, the Employment Cost Index rose by 0.5% in the third quarter, reflecting a 0.4% gain in wages and salaries and a 0.6% increase in benefits costs.
The ECI was up 2.4% year/year in the third quarter, down from a 2.7% year/year rate in the previous quarter.
Released later in the morning, the Chicago PMI fell slightly to a reading of 61.1 in October after rising to 64.2 in September, still indicating expansion. There were declines in the readings for four of the five main components, with new orders the only exception.
The only other regional index that declined in the month was the Empire State reading. As with Chicago, that reading was still well into positive territory.
The remaining regional data and the flash Markit estimate were all higher, so the outlook for next week’s manufacturing ISM index is for another small increase.
Regional Manufacturing Surveys (sources as stated)
Finally, the Michigan Sentiment index for October was revised up to 81.8 from the 81.2 in the preliminary estimate, putting the reading further ahead of the 80.4 index in September.
The current conditions and expectations readings were both revised higher, though Michigan noted significant concerns around the election and the resurgence of COVID-19 cases that could reduce confidence going forward.
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Contact this reporter: kevin@macenews.com.
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