US: Spending Disappoints in October, Income stronger than expected - Wells Fargo

Analysts from Wells Fargo, point out that the report on personal income was stronger-than-expected but it was partially offset by disappointment in the spending data. 

Key Quotes: 

“Personal income growth was stronger than expected in October, up 0.6 percent versus expectations of only 0.4 percent. Disposable personal income was also up 0.6 percent, while adjusted for price changes it was up 0.4 percent. The increase in personal income was motorized by a strong increase in wages and salaries in the service sector, up $32.0 billion, while wages and salaries in goods industries increased a relatively robust $9.7 billion, with $6.1 billion of that increase coming from the manufacturing sector.”

“After a strong revision for real third quarter personal consumption expenditures earlier this week, up 2.8 percent versus 2.1 percent, October’s personal spending result was disappointing, coming in at 0.3 percent in nominal terms and at only 0.1 percent in real terms, with both numbers missing expectations on the downside.”

“Most of the strength in personal consumption in the third quarter occurred in September, up 0.5 percent in real terms. The start to the last quarter of the year was not promising but we do not think this result will change expectations regarding PCE during the last quarter of the year.”