Personal income for all Americans rose a respectable 0.8 percent in August, while consumer spending continued to increase at a healthy clip, the government said yesterday.
Personal income grew $16.5 billion last month to a seasonally adjusted annual rate of $2.138 trillion, due in part to the first increase in manufacturing employment since February, the Commerce Department said in a monthly report.
The size of the increase was only about half of July's revised 1.5 percent gain. But almost all of July' increase resulted from a 14.3 percent cost-of-living raise for Social Security recipitents.
Commerce noted that the August increase in pesonal income also was held down somewhat by a $800 million decline in government transfer payments for unemployment, Social Security, welfare and various disability programs.
In the same report, the department said personal spending rose $19.7 billion, or 1.2 percent, in August to $1.685 trillion after increasing by 1.9 percent in July and 0.8 percent in June.
Wages and salaries for Americans rose 1 percent, or $13.3 billion, in August to $1.313 trillion following a negligible gain the month before, the department said. An improving employment picture, particularly among factory workers, was largely responsible.
Personal taxes were up 1.4 percent, or $4.6 billion, to $333.5 billion last month.
Commerce also said yesterday that the U.S. balance-on-current-account deficit declined only slightly in the second quarter, dipping by $135 million to $2.5 billion. The red ink for all of 1979 was $788 million.
The department's important figure is a measure of U.S. economic transactions with the rest of the world on a current basis. It measures goods, services, foreign aid, loans to foreigners, the movement of U.S. gold and such payments as pensions to Americans living abroad.
The United States imported $7.6 billion more merchandise than it exported during the quarter; a reduction in imports -- mainly petroleum -- cut that deficit from $10.9 billion in the first quarter.
However, the department said the improvement in the current-account deficit was more than offset by a $4.8 billion drop in net income from foreign investments to $5 billion. The Commerce Department attributed that decline to Saudi Arabia's purchase of the interests of four U.S. petroleum companies in Aramco, the Arabian-American Oil Co.
Net receipts on other services rose by $1.2 billion to total $1.4 billion for the quarter.
U.S. official reserve assets fell $500 million, reflecting reduced holdings of foreign currencies, chiefly marks.
One part of the report on personal income and spending suggested that Americans are dipping into their savings again to make day-to-day purchases. Personal savings declined 9.4 percent, or $8 billion, in August to $76.8 billion.
Personal savings now have fallen for three straight months after peaking at $91 billion in May. The portion of income put aside for savings also dropped for the third straight month, to a 4.3 percent rate. The rate had fallen under 4 percent earlier in the year -- drying up the money available for home loans and for business expansion.
William Cox, a Commerce Department economist, said the income figures "were perhaps a little leaner than we had expected but still pretty much in line with what we had learned earlier from employment and hourly earnings" statistics, both of which were up in July.
Cox said the increase in spending "shows consumers are ready to come back into the market," shedding some of the resistance that had built up earlier this year because of uncertainties in the economy.
Wages and salaries rose by $13.3 billion in August, far above the $200 million increase recorded in July. Payroll increases in August were at least double the growth the previous month in all major sectors of the economy except in government, whose gains of $900 million were less than the $1.1 billion increase in July.
Commerce Department analysts were especially impressed by payroll increases registered by commodity-producing industries. Wages were up $5.7 billion after a $2.4 billion decline in July.
Manufacturing payrolls increased $5 billion in August after a slight drop in July. The rise reflected not only higher average hourly pay but the first increase in manufacturing employment since February, the report said.
Payrolls of retails stores and other distributive indudtries climbed $2.5 billion in August compared with a $600 million boost the previous month. Wages in the service industries rose $4.2 billion, following an $800 million increase in July. Farmers' incomes rose from a $23.9 billion annual rate in July to a rate of $24.2 billon in August.
Spending on durable goods -- including cars and major appliances -- was up by a $1.9 billion annual rate last month compared with a $16.2 billion rate in July. Outlays for nondurables rose $8 billion, more than double the July increase.