Personal income in the U.S. rose by slightly more than anticipated in the month of December, according to a report released by the Commerce Department on Monday, although the report also showed a slightly bigger than expected drop in personal spending.
The report said personal income rose by 0.3 percent in December, matching the downwardly revised increase seen in November.
Economists had expected income to inch up by 0.2 percent compared to the 0.4 percent growth originally reported for the previous month.
Disposable personal income, or personal income less personal current taxes, also rose by 0.3 percent for the second consecutive month.Real disposable income, which is adjusted to remove price changes, increased by 0.5 percent in December compared to the 0.4 percent growth seen in November.
Paul Diggle, an economist at Capital Economics, said the data suggests that "income growth is accelerating as employment continues to rise rapidly."
"The falling unemployment rate suggests that stronger wage growth should also start to boost income growth soon," Diggle said. "Add in the boost to real spending power from the lower gasoline price and this all bodes well for consumption growth in early 2015."
Meanwhile, the report said personal spending dipped by 0.3 percent in December after climbing by a downwardly revised 0.5 percent in November.
Spending had been expected to edge down by 0.2 percent compared to the 0.6 percent increase originally reported for the previous month.
Real spending slipped by just 0.1 percent in December following the 0.7 percent increase seen in the previous month.
With income rising and spending falling, personal saving as a percentage of disposable personal income jumped to 4.9 percent in December from 4.3 percent in November.
The Commerce Department also said its personal consumption expenditures price index fell by 0.2 percent in December after a matching drop in November. The annual rate of growth subsequently slowed to 1.3 percent from 1.4 percent.
Core PCE prices, which exclude food and energy prices, were unchanged in December and up 1.3 percent year-over-year.
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