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$]