FALLING prices and rising wages are boosting US consumers’ spending power, figures released yesterday by the Bureau of Labor Statistics revealed.
Average hourly earnings rose 0.2 per cent from September to October, while the consumer price index fell by 0.1 per cent over the same time period, leading to an overall rise in real wages of 0.3 per cent.
This rise represents a turnaround from the pattern of the last year, when real average hourly earnings fell 1.6 per cent over the twelve months to October.
Core inflation fell to 1.8 per cent on a three-month, annualised basis, from a peak of 3.1 per cent in July.
“This decline in core inflation is probably enough already for the Fed to launch a new round of quantitative easing (QE3) early next year,” said Capital Economics’ Paul Ashworth.
Meanwhile industrial output rebounded in October, rising 0.7 per cent on the month, in contrast with the 0.1 per cent fall in September.
However, housing data painted a less positive picture, with MBA mortgage applications falling 10 per cent last week, on a seasonally adjusted basis. Some mortgage rates increased during the week.