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Free AccessREPEAT: MNI DATA ANALYSIS: US January Core PCE Prices +0.3%>
Repeats Story Initially Transmitted at 13:30 GMT Mar 1/08:30 EST Mar 1
--Personal Income Up 0.4%; PCE Up 0.2%, But Real PCE Down 0.1%
--Initial Jobless Claims Fall 10,000 To 210,000; Lowest Since 1969
By Kevin Kastner, Sara Haire, and Holly Stokes
WASHINGTON (MNI) - Personal income rose 0.4% in January, while
nominal PCE was up 0.2% and the core PCE price index rose 0.3% in the
month and 1.5% year/year, all roughly as expected, data released by
the Bureau of Economic Analysis Thursday morning showed.
The core price index's 1.5% year/year rise in January was the
fourth in a row, still significantly below the levels in early 2017 and
the Fed's 2.0% target.
Analysts had expected personal income to rise only 0.3% in the
month, but a 0.5% jump in wages and salaries and solid gains in transfer
payments and rental income caused the stronger-than-expected gain.
Minimum wage increases in some states and the annual cost of living
increase for Social Security provided much of that support.
Nominal PCE and the core price index both came in as expected.
The saving rate rose to 3.2% in January from 2.5% in December, the
highest rate since August, but well below the levels seen early-last
year. Some analysts have suggest that the plunge in the savings rate
over the last year, from a 2017 high of 4.1% in February, has supported
consumption. Consumers, confident about the economy and job prospects,
have shifted their priorities from saving to spending.
Disposable personal income jumped 0.9% in the month, the strongest
gain since January 2017. Personal taxes fell by 3.3% in the month on the
introduction of the new tax law, so the rising level of personal income
was able to boost disposable personal income. Real disposable income was
up 0.6%.
--ENERGY PCE PRICES REBOUND
The 0.2% gain in current dollar PCE followed stronger gains in the
previous four months. Spending on durable goods fell 1.5% in the month,
but nondurable goods spending rose 1.0% on a 3.0% rebound in energy
prices. Services spending was up 0.3%.
Real PCE fell 0.1% in January, the first decline since January
2017, as the overall PCE price index rose 0.4% due to the energy price
surge. The overall price index was up 1.7% year/year, the same as the
previous two months.
After inflation adjustment, durable goods PCE was still down 1.6%
but nondurable goods PCE was flat, compared with the 1.0% nominal gain.
Real services PCE was up 0.1%.
The January real PCE level was up only 0.7% at an annual rate from
the fourth quarter average. PCE was up 3.8% in the fourth quarter GDP
report.
--CLAIMS LEVEL HITS ANOTHER LOW
Also released on Thursday, initial jobless claims fell by 10,000 to
210,000 in the February 24 holiday week, well below the 226,000 level
expected and the lowest level since the December 6, 1969 week.
The four-week moving average fell by 5,000 to the lowest level seen
since the December 27, 1969 week, as the 230,000 level in the January 27
week dropped out of the equation. The average would decline further next
week if there is no change to the headline number as the 223,000 level
in the February 3 week drops out.
Continuing claims rose by 57,000 to 1.931 million in the February
17 employment survey week, but was still down 9,000 from the 1.940
million level in the January 13 employment survey week. The data still
suggest that labor markets remain tight and that workers are finding
jobs fairly quickly.
** MNI Washington Bureau: 202-371-2121 **
To read the full story
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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.