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Free AccessMNI DATA ANALYSIS: US June Core PCE Prices At +1.9% Y/Y>
--Core PCE Prices Up 0.1% M/M; May Y/Y Rate Revised Down To +1.9%
--Nominal PCE Up 0.4%, Real PCE Up 0.3%
By Kevin Kastner, Harrison Clarke, and Shikha Dave
WASHINGTON (MNI) - Nominal PCE rose 0.4% in June, a smaller gain
than the 0.5% increase expected, while core PCE prices rose 0.1% to put
the year/year rate at 1.9% after May was revised down to that point,
data released by the Bureau of Economic Analysis Tuesday morning
suggested.
The 1.9% year/year rate for core PCE prices is the third in a row,
after annual revisions to the rate at 2.0% in March, but it remains very
close to the Fed's target and should not cause any concern as the FOMC
meets this week.
--PCE GROWTH SLOWS
The 0.4% gain in current dollar PCE, below the 0.5% rise expected,
followed a sharply upward revised 0.5% gain in May. Spending on durable
goods was flat in the month, while nondurable goods spending fell 0.1%
on a 0.1% decline in energy prices. Services spending was up 0.6%.
Real PCE was up 0.3% in June, as the overall PCE price index was
up 0.1% despite the fall in energy prices. The overall PCE price index
was up 2.2% year/year, the same as in May.
After inflation adjustment, durable goods PCE was up 0.4%, while
real nondurable goods PCE was down 0.1% and real services PCE was up
0.4%.
--INCOME GROWTH, SAVINGS RATE STEADY
Personal income growth was supported by a 0.4% gain in wages and
salaries, as well as increase in the other income categories.
The saving rate was unchanged in June from 6.8% in May, with higher
levels than previously reported due to the benchmark revisions reported
on Friday. The savings rate was down from the 7.2% average rate in the
first three months of the year.
Personal taxes rose by 0.3% in the month after a 0.2% gain in
May. As a result, disposable personal income rose by 0.4%, the same as
in May. Real disposable income was up 0.3%, an increase from the 0.2%
May gain.
--EMPLOYMENT COST GROWTH SLOWS
Also released Tuesday, the Employment Cost Index slowed in the
second quarter to a 0.6% increase, as expected, after a 0.8% increase in
the first quarter.
Despite the slower quarter/quarter growth, the year-over-year
rate rose to 2.8% from 2.7% in the first quarter due to softer gain in
the second quarter of 2017.
Benefits growth accelerated this quarter to a 0.9% increase after a
0.7% rise in the first quarter. Benefits were up 2.9% year/year, a
faster pace than the 2.6% year/year rate in first quarter.
Wage and salary growth rose only 0.5% after a 0.9% gain in the
first quarter, but the year/year pace still moved up to 2.8% from 2.7%
in the previous quarter.
** MNI Washington Bureau: 202-371-2121 **
[TOPICS: MAUDS$,MT$$$$,M$U$$$]
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.