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Services Consumption Continues To Roar Back


One of the key questions about the recovery from the pandemic has been how quickly the services sector would recover - and April's PCE report suggests that it continues to roar back.

  • Looking into subcomponents in real terms, services enjoyed a +0.6% expansion, while goods consumption contracted by 1.3% (led by nonndurables at -1.6% , vs -0.9% durables). On a Y/Y basis, services rose by an all-time high 19.3%, while goods were up 34%.
  • This was a bit of a slowdown from March (+1.6% svcs, +8.9% goods), but that month's figures were seen as being distorted in part by large one-off transfer payments to consumers.
  • It's difficult to gauge 'consensus' on the underlying goods vs services growth, but overall personal spending was in line with expectations (+0.5% M/M). That's nominal - real spending fell -0.1% M/M vs +0.2% forecast.
  • Overall, looks largely in line in terms of the recovery in services so far, though the overall PCE figure will probably weigh a little bit on Q2 GDP projections.

Source: BEA, MNI

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