MNI DATA ANALYSIS: US July Core PCE Prices Rise To +2.0% Y/Y>

--Core PCE Prices Up 0.2% M/M; Overall Prices +0.1% M/M, +2.3% Y/Y

--Nominal PCE Up 0.4%, Real PCE Rises 0.2%; Personal Income +0.3%

--Initial Jobless Claims +3k to 213k In August 25 Week 

By Kevin Kastner, Harrison Clarke, and Shikha Dave

     WASHINGTON (MNI) - Nominal PCE rose 0.4% in July, matching the 0.4% 

increase expected, while core PCE prices rose 0.2% to raise the 

year/year rate to 2.0% from 1.9% in June after rounding, according to 

data released by the Bureau of Economic Analysis Thursday morning. 

     The 2.0% year/year rate for core PCE prices is a rebound to the 

Fed's 2.0% inflation target from 1.9% in June. May's gain was revised 

upward to 2.0%. 

--PCE GROWTH STEADY

     The 0.4% gain in current dollar PCE, in line with expectations, 

followed an unrevised 0.4% gain in June. Spending on durable goods was 

down 0.2% in the month, while nondurable goods spending rose 0.4% 

despite a 0.5% decline in energy prices. Services spending was up 0.4%.   

     Real PCE was up 0.2% in July, as the overall PCE price index was up 

0.1% despite the decline in energy prices. The overall PCE price index 

was up 2.3% year/year from 2.2% in June, and is the strongest since 

March 2012. 

     After inflation adjustment, durable goods PCE was down 0.5%, while 

real nondurable goods PCE was up 0.6% and real services PCE was up 0.2%. 

     An MNI calculation shows that real PCE in July was up 2.1% at an 

annual rate from the second quarter average, and was up 3.1% after an 

adjustment for only having one month of data. This was below the 3.8% 

PCE pace in the second quarter reported on Wednesday.      

--INCOME RISES, SAVINGS RATE DOWN SLIGHTLY

     Personal income growth was supported by a 0.4% increase in wages 

and salaries, as well as gains in most other income categories. 

     The saving rate fell slightly in July to 6.7% from 6.8% in June. 

The July saving rate was down from the 6.8% average rate in the second 

quarter. 

     Personal taxes rose by 0.1% in the month after a 0.3% rise in June. 

Disposable personal income rose by 0.3% after a 0.4% in June. Real 

disposable income was up 0.2%, a slower pace than the 0.3% June gain. 

--INITIAL JOBLESS CLAIMS RISE SLIGHTLY

     Also released at the same time on Thursday, initial jobless claims 

rose by 3,000 to 213,000 in the August 25 week, as expected. However, 

the four-week moving average fell by 1,500 to 212,250, and could fall by 

250 in the September 1 week as the 214,000 level in the August 4 week 

rolls out of the equation. 

     Continuing claims fell by 20,000 to 1.708 million in the August 18 

employment survey week, down 39,000 from the 1.747 million level in the 

July 14 employment survey week. The four-week moving average for 

continuing claims fell by 4,500 to 1.731 million. 

     ** MNI Washington Bureau: 202-371-2121 ** 

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