Personal spending in September fell for the first time in two years, although personal income managed a better-than-expected increase, the Commerce Department said today. Personal consumption expenditures fell 0.3% in September as expected, after remaining flat in August. That’s the first drop in two years and the largest since May 2005.

After adjusting for inflation, real consumer spending fell 0.4%. Personal income was up 0.2%, higher than the 0.1% rise economists polled by Thomson Reuters IFR Markets were expecting. After adjusting for inflation and taxes, real disposable income was up 0.1%. Inflation as measured by the Core Personal Consumption Expenditure index, excluding food and energy, rose 0.2% in September, higher than the 0.1% gain expected. The headline PCE price index was up up 0.1% in the month. Core PCE is up 2.4% over the last year, just under the 2.5% gain expected. Payments by private employers increased $300 mln in September, much lower than the $24.1 bln increase seen in August. Payments to goods-producing and manufacturing employees fell, while service industry and government payrolls increased. Personal spending on durable and non-durable goods fell sharply in September, but spending on services increased. The personal savings rate for September was 1.3%, up from 0.8% in the prior month.

source: forexfactory.com