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MNI DATA ANALYSIS: US April Core PCE Prices At 1.8% Y/Y>

--Core PCE Prices Up 0.2% M/M; March Y/Y Rate Revised Down To 1.8%
--Nominal PCE Jumps 0.6%, Real PCE Up 0.4%, Solid Start To Second Quarter 
--Initial Claims Fall 13,000 To 221,000 In May 26 Week
By Kevin Kastner and Holly Stokes
     WASHINGTON (MNI) - Nominal PCE rose 0.6% in April, a stronger gain 
that expected, while core PCE prices rose 0.2% to keep the year/year 
rate at 1.8% after a March revision, both factors that will weigh on the 
minds of analysts ahead of the June FOMC meeting, data released by the 
Bureau of Economic Analysis Thursday morning suggested. 
     The core price index's 1.8% year/year rise in April was unchanged 
from March after that month's year/year pace was revised down after 
rounding. Either way, it remains well above the 1.5% rate seen in the 
first two months of the year before a special factor in March 2017 
rolled out of the calculation. 
--PCE GROWTH SOLID TO START SECOND QUARTER 
     The 0.6% gain in current dollar PCE, well ahead of the 0.4% rise 
expected, followed an upward revised 0.5% gain in March. Spending on 
durable goods rose 0.3% in the month, while nondurable goods spending 
jumped 0.9% on a 1.5% gain in energy prices. Services spending was up 
0.5%.   
     Real PCE was up only 0.4% in April, as the overall PCE price index 
was up 0.2% due to that gain in energy prices. The overall price index 
was up 2.0% year/year, the same as in March. 
     After inflation adjustment, durable goods PCE was up 0.3%, while 
real nondurable goods PCE was still up 0.4% and real services PCE was up 
0.4%. 
     Through one month, second quarter real dollar PCE is up 2.7% at a 
seasonally adjusted annual rate from the first quarter compared with the 
1.0% rise in real PCE in the first quarter GDP report released 
Wednesday, suggesting the soft consumption in the first quarter may have 
been short-lived. 
--INCOME GROWTH STEADY, SAVING DIPS
     Personal income growth was supported by a solid gain in wages and 
salaries, as well as smaller increases in the other income categories. 
     The saving rate fell to 2.8% in April from 3.0% in March, keeping 
the rate well below its 3.7% year-ago level. Some analysts have 
suggested that the relatively low level of savings has helped 
consumption, though much of the consumption gains seen over the last 
year seem to be financed rather than supported by cash. 
     Personal taxes fell by 0.5% in the month after a 0.3% gain in 
March. As a result, disposable personal income rose by 0.4%, while real 
disposable income was up 0.2%. 
--INITIAL JOBLESS CLAIMS FALL BACK
     Also released on Thursday, initial jobless claims fell by 13,000 to 
221,000 in the May 26 week, slightly below the 224,000 level expected. 
However, several states were estimated this week due to the shorter 
reporting period after the Memorial Day holiday, so a revision next week 
is possible. 
     The four-week moving average rose by 2,500 to 222,250, and would be 
expected to rise by 2,500 gain next week as the 211,000 level in the May 
5 week rolls out of the calculation. 
     The level of continuing claims fell by 16,000 to 1.726 million in 
the May 19 week after rising by 30,000 in the previous week. The 
four-week average for continuing claims fell 8,500 to 1.744 million, 
another decades-low level. 
     ** MNI Washington Bureau: 202-371-2121 ** 
[TOPICS: MAUDS$,MT$$$$,M$U$$$,MAUDR$]

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