Personal income edges higher

By Blake Ellis, staff reporter


NEW YORK (CNNMoney.com) -- Personal spending ticked higher in May, while income rose for a 7th straight month, according to a government report released Monday.

Personal income edged up $53.7 billion, or 0.4%, last month, following an upwardly revised 0.5% rise in April, the Commerce Department said.

A consensus of economists polled by Briefing.com expected personal income to climb 0.5% in May.

Spending by individuals rose $24.4 billion, or 0.2%, after rising less than 0.1% in the previous month. This came in slightly higher than the 0.1% increase expected by economists.

"While [May's report] wasn't anything too exciting, overall it was still stronger than we expected," said Tim Quinlan, an economic analyst at Wells Fargo. "It shows that we're seeing a pick-up in income and suggests U.S. consumers are starting to have the confidence to open up their wallets a bit."

Saving up: Monday's report showed consumers were building up their savings in May. Personal savings as a percentage of disposable income rose to 4% last month from 3.8% in April.

Quinlan said the increase in savings shows that consumers are becoming more careful with their money as the economy slowly recovers.

"The savings rate was nearly 0% before the recession, but consumers really didn't like the way that felt - to not have savings when the economy slowed down," said Quinlan. "So now people are seeing the wisdom of having a rainy day fund."

Outlook: Job growth will dictate the direction of spending and income going forward, said Quinlan.

"There are signs the economy is turning around, and we've seen wage growth," he said. "But the tentative signs of recovery in the jobs market have been attributed to Census hiring, so from here the measure will be whether we can maintain growth after that rolls off."

Earlier this month, the government said employers added the most jobs in ten years, due to a surge of Census worker hiring.

Employers added 431,000 jobs in May, up from an increase of 290,000 in April, and Census hiring was responsible for 411,000 of those jobs.  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,314.45 48.46 0.28%
Nasdaq 4,584.22 -9.21 -0.20%
S&P 500 2,013.76 2.40 0.12%
Treasuries 2.59 -0.04 -1.60%
Data as of 3:47pm ET
Company Price Change % Change
Yahoo! Inc 41.18 -0.91 -2.15%
Bank of America Corp... 16.98 -0.06 -0.38%
Oracle Corp 39.86 -1.69 -4.07%
Microsoft Corp 47.14 0.46 0.99%
Apple Inc 101.70 -0.09 -0.09%
Data as of 3:32pm ET

Sections

P&G, a major NFL sponsor, will still contribute $100,000 to fight breast cancer but won't be part of the league's events next month. More

Scotland's clear rejection of independence has eased fears that it could suffer the kind of decline seen in Quebec after it failed to break away from Canada. More

It's really good to be Larry Ellison. The Oracle founder is stepping down as CEO, so maybe he'll have more time to enjoy his glamorous life. More

As Occupy Wall Street goes on its debt-abolishing tear, thousands of people across the country are begging them to forgive their loans. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.