A report released by the Commerce Department on Friday showed personal income in the U.S. increased in line with economist estimates in the month of May, although the report also showed weaker than expected growth in personal spending.
The report said personal income climbed by 0.4 percent in May after edging up by a downwardly revised 0.2 percent in April.
Economists had expected income to rise by 0.4 percent compared to the 0.3 percent increase originally reported for the previous month.
Disposable personal income, or personal income less personal current taxes, also increased by 0.4 percent in May after rising by 0.3 percent in April.
Meanwhile, the Commerce Department said personal spending rose by 0.2 percent in May after climbing by a downwardly revised 0.5 percent in April.
Personal spending had been expected to increase by 0.4 percent compared to the 0.6 percent growth originally reported for the previous month.
The report said real spending, which is adjusted to remove price changes, came in unchanged in May after rising by 0.3 percent in April.
“Even though real consumption was unchanged in May, big gains in previous months mean that consumption growth is still on track to rebound in the second quarter overall, to around 3% annualized,” said Michael Pearce, Senior U.S. Economist at Capital Economics.
He added, “Together with a big contribution from investment and net trade, that would leave overall GDP growth on track to rise by 3.5% – 4.0% annualized.”
With income climbing more than spending, personal saving as a percentage of disposable income rose to 3.2 percent in May from 3.0 percent in April.
A reading on inflation said to be preferred by the Federal Reserve showed the annual rate of core consumer price growth accelerated to 2.0 percent in May from 1.8 percent in April.