Free Trial

MNI 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$$$$,M$U$$$]

To read the full story

Close

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.