**MNI DATA IMPACT:US June Core PCE Prices +0.2%; Y/Y +1.6%>

By Kevin Kastner, Brooke Migdon and Alexandra Kelley

     WASHINGTON (MNI) - The core PCE price index came in at a 0.2% 

increase in June, as expected by the Bloomberg and MNI surveys, data 

released Tuesday by the Department of Commerce showed. 

     The core PCE year/year rate rose to 1.6% after 1.5% gains in each 

of the last three months, but still well below the Federal Reserve's 2% 

target. 

     Here are some of the key factors from the data release on Tuesday: 

     - Personal income was up 0.4% in June, as expected by both the 

Bloomberg consensus and a MNI survey of analysts. Growth in wages and 

salaries, which rose 0.5% in the month, were the primary driving factors 

of PCE growth. An MNI preview released on Monday noted the potential 

positive influence recent employment data may have on June personal 

income, with private payrolls rising by 224,000 in the same month. 

     - Offsetting the solid wage gain was positive, but slower, growth 

in the other income categories.

     - Current dollar PCE was up 0.3% in June, also in line with 

forecasts from MNI and Bloomberg. The increase was the result of a 0.4% 

rise in durable goods spending, offset by slower nondurable goods 

spending. Services spending slowed this month, posting a 0.3% gain after 

a 0.4% increase in May. 

     - Real PCE posted a 0.2% increase in June after an 0.3% gain in 

May. Unlike current dollar PCE, real durables PCE was down 0.1% in June, 

while real nondurables rose 0.7% in the month. Real services spending 

increased 0.1%. 

     - PCE was up 4.3% for the second quarter, according to data 

published Friday. MNI had expected real PCE to post significant growth 

considering the GDP data released on Friday, which showed that real PCE 

was up sharply in the second quarter. 

     - The overall PCE price index rose 0.1% in June following an 

identical reading in May. The year/year rate was 1.4%, unchanged from 

May.

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

[TOPICS: MAUDS$,M$U$$$,MAUDR$]