29 June 2012 18:03 [Source: ICIS news]
In its monthly report on income and outlays, the department said consumers’ after-tax take-home pay increased by 0.2% in May from April, about the same rate of growth seen in April from March.
However, in the first quarter of this year, take-home pay for most Americans saw increases of 3% in January and 4% in both February and March.
Reflecting the April-May slowing in income growth, the department said consumers cut their spending in May.
The report said personal consumption expenditures (PCE) – the department’s term for consumer spending – fell by $4.7bn (€3.7bn) or less than 0.1% in May.
Although a marginal decline, that downturn in consumer spending last month is in contrast to the 0.1% increase ($16.2bn) recorded in April.
Consumer confidence and spending are critical indicators for the
Overall, the department said private wage and salary disbursements grew by $1.1bn in May, considerably lower than the $5.3bn-advance seen in April.
In goods-producing industries, payrolls fell by $7bn in May compared with April’s gain of $5.6bn. Manufacturing payrolls also fell in May, down by $4.5bn compared to the increase of $3.2bn in April.
However, the services industry saw an $8.3bn gain in payrolls in May compared to a $400m decline in April. Government employee wages grew by $300m in May, a slight decline from the $400m expansion reported for April.
As they cut back on spending in May, consumers also tucked more money away.
The savings rate rose by 3.9% in May compared with the April increase of 3.7%, another sign that consumers are becoming more cautious about the near-term future.
Also on Friday, the
The UM index of consumer sentiment fell by 7.7% in June from May, and there was an 8.7% decline in the index of consumer expectations.
($1 = €0.80)
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy
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