With personal income once again rising at a faster rate than personal spending, the Commerce Department released a report on Friday showing that the U.S. savings rate reached a nine-month high in September.
The report showed that personal income increased by 0.5 percent in September, matching the increase seen in August. Economists had been expecting income to rise by about 0.3 percent.
Disposable personal income, or personal income less personal current taxes, also increased by 0.5 percent for the second consecutive month.
Meanwhile, the Commerce Department said personal spending edged up by 0.2 percent in September after rising by 0.3 percent in August. The modest increase matched economist estimates.
Real spending, which is adjusted to remove price changes, inched up by 0.1 percent in September compared with an increase of 0.2 percent in the previous month.
The stronger income growth pushed personal saving as a percentage of disposable personal income up to 4.9 percent in September from 4.7 percent in August.
With the increase, the savings rate reached its highest level since last December, when incomes jumped amid accelerated dividend and bonus payments in anticipation of higher tax rates.
Paul Dales, Senior U.S. Economist at Capital Economics, said the income growth and the increase by the savings rate bodes well for spending in the fourth quarter.
"Of course, the government shutdown may have hit spending last month," Dales said. "But if that's the case, we'd expect a catch-up in November."
"With income growth accelerating and the saving rate rising, annualized real consumption growth could get close to 2% in the fourth quarter," he added.
The Commerce Department also said its reading on core consumer prices, which exclude food and energy prices, increased at an annual rate of 1.2 percent in September, unchanged from the previous month.
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