Personal income edges higher

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.