US DATA
Real PCE spending came in at 0.40% M/M in December - above the 0.3% expected coming into this week, but not enough to explain the strong acceleration in quarterly consumer spending we saw yesterday in Q4 GDP data. For that, we have the revisions to thank: October was revised up to 0.21% M/M (from 0.12%), with November to 0.47% (from 0.28%).
- That meant the quarterly reading reached 4.2% (3mma ar) - recall that consensus going into yesterday was for 3.2% (and was 3.7% in Q3).
- We also note that the goods and services consumption breakdown is looking healthier: real goods consumption rose 0.7% M/M (after an upwardly revised 1.1% in November, was 0.7%), bringing the quarterly rate to 6.6% as shown in GDP.
- We had been more concerned about services consumption though given that it looked to have been tapering off into year-end, but the revisions now suggest very much otherwise: October and November real services consumption were each revised up by 0.1pp (to 0.3% M/M and 0.2% respectively), with December coming in at a robust 0.3%.
- That meant that instead of an apparent deceleration in services spending in the quarter through November, it's as robust as it has been since Q1 2024 (3.1% Q/Q).
- All in all, Q4 was a strong quarter for the consumer, and suggests little let-up in demand heading into 2025.
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