August Personal Income Rises 0.5%, PCE Up 0.4%

WASHINGTON — Personal income rose more than economists anticipated in August, surging 0.5% to post the largest gain since May of last year, the Commerce Department reported Friday.

Consumer purchases rose 0.4% in August for a second month while core PCE rose 0.1% from July and was up 1.% from August 2009.

“Personal income posted its firmest advance of the year thus far,” Michael Moran, chief economist at Daiwa Capital Markets, said in a research note.

“Wage and salary growth was moderate at 0.3%, but a jump in government transfer payments reflecting the reauthorization of emergency unemployment benefits pulled overall income higher,” Moran said.

Government wages fell $5.2 billion as states and localities furloughed workers. The salaries of Census workers contributed just $900 million  billion to wages after $2.5 billion in July.

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