The beginning of September saw good news flowing in many corners of the economy.
The consumer made a comeback in July-in both income and spending. Personal income in July posted a 0.2 percent gain, following no change in June. The July figure was a little lower than the consensus expectation for a 0.3 percent rise. More importantly, the wages & salaries component rebounded 0.3 percent after slipping 0.1 percent in June. This component would have been even stronger had it not been for a dip in government payrolls from laying off temporary Census workers. Private industry wages and salaries gained 0.5 percent in July, following a 0.1 percent dip in June. The consumer sector bounce-back should help support overall economic growth.
And retail sales followed the consumer. Chain-store sales improved in the August 28 week, according to Redbook's tally which shows a plus 3.0 percent year-on-year pace vs. a plus 2.6 percent pace in the prior week. The positive trend is very steady, showing a four-week average of 2.8 percent over the past two weeks and 2.9 percent over the five prior weeks.
ISM's manufacturing report on business reported a PMI that came in at a stronger-than-expected 56.3 for a sizable eight tenths gain from July. The reading is well over 50 to signal month-to-month growth and in the comparison with July, and points to growth at an accelerating rate. Further this growth is in business activity like production, employment, and inventories. These three factors all accelerated in August. The ISM report is solid and includes strength in both exports and imports and an increase in prices paid that reflects demand for inputs. Jobs in manufacturing have now grown for 9 straight months and last month reflects hiring that is accelerating.
Initial jobless claims are now edging down, as they have for the past couple of weeks. Initial claims for the August 28 week came in at 472,000 compared with a revised 478,000 in the prior week and the 2010 peak of 504,000 the week before that. The four-week average fell 2,500 to 485,500.
And the overall private sector is providing jobs again... that sector added 67,000 positions after a 70,000 boost in July. Leading the way was a 45,000 boost in education & health services, with health care up 40,000. Professional & business services returned to positive territory, rising 20,000 after dipping 3,000 in July.