WASHINGTON — Americans’ paychecks in the first half of 2012 grew at the fastest pace in five years, pointing to an improvement in purchasing power that may help propel the economic expansion.
Wages and salaries for all employees increased at a 4.8 percent annual pace from January through June after adjusting for inflation, the most since March 2007, according to calculations by Harm Bandholz, chief economist at UniCredit Group in New York, based on data from the Commerce Department. The pickup contrasts with last week’s Labor Department report that showed the smallest gain in average hourly wages on record.
“What matters to people is the size of the paycheck,” said Stephen Stanley, chief economist at Pierpont Securities in Stamford, Conn. “How much money you get in the bank, that’s what I care about.”
The Commerce Department figures take into account the total number of people holding jobs and the length of the workweek, which is what shows up in Americans’ paystubs. The recent gains indicate consumers have the means to boost spending and shield the U.S. from any global slowdown as Europe’s debt crisis lingers and Asia cools.
China’s export growth collapsed and imports and new yuan loans trailed estimates in July, the country’s customs bureau reported Friday. Concern about Europe’s debt crisis also grew as French industrial output stagnated in June, the latest sign that the euro area’s second-largest economy may be heading for its first recession in three years.
An increase in hours worked in the first half of this year and the drop in fuel costs is what gave U.S consumer buying power the additional boost, making up for gains in payrolls that have been too small to reduce unemployment. The jobless rate climbed to 8.3 percent in July, a five-month high.
Employers took on 896,000 additional workers from January through June, little changed from the 875,000 gain in the final six months of 2011. Nonetheless, the average workweek for all employees increased by 6 minutes in the first half of the year from the previous six months, which represents 2.6 hours of extra pay for the six-month period. When spread over the 111 million employees on company payrolls who made $23.39 an hour on average, that represents an additional $6.75 billion pumped into the economy.
Inflation also ebbed. The Commerce Department’s price gauge tied to consumer spending patterns climbed 1.5 percent in the year ended June after rising 2.6 percent in 2011.