Personal Spending, Income, Up in August

Washington, DC, Oct. 1, 2009--Personal spending increased 1.3% in August, the largest monthly increase since October 2001, while income rose by 0.2%, the Commerce Department reported today.

Economists were expecting a smaller 1.1% increase in consumption after it rose 0.2% in July (since revised to 0.3%).

When adjusted for inflation, consumption rose 0.9% compared with 0.2% in July. Purchases of durable goods carried August's spending increase, rising 5.8% in the month compared to 1.8% in July.

Increased purchases of motor vehicles and parts, spurred by the government's Cash For Clunkers Rebate Program, accounted for much of the increase.

Purchases of non-durable goods increased 1.1% in August. The increase in consumption pulled down the personal savings rate to 3.0% in August.

Meanwhile, income rose 0.2% for the second consecutive month, above the 0.1% economists were expecting.

Wage and salary disbursements rose in every sector of the economy except for manufacturing, where payrolls declined $3.3 billion.