“May personal consumption expenditure (PCE) data printed stronger than our and market expectations: core PCE rose 1.96% y/y, rising by a rounded 2% for the first time in six years, and 0.21% m/m,” note Standard Chartered analysts.
Key quotes
“Core goods prices and health care helped inflation momentum. Core goods prices remains an area to watch as pressures from producer prices, which have persisted for some months, may finally be seeping into core consumer inflation – a trend we anticipated earlier this year.”
“Personal income rose 0.4% m/m; wages and salaries increased 0.3% m/m, building on an increase in April. Wages and salary disbursements have risen by 4.7% y/y, on average, so far in 2018, compared to the 2017 average of 3.3% y/y. Consumer spending increased by 0.2% m/m, less than hoped, but still a solid pace.”
“Disposable income rose 0.4% m/m, the highest since January 2018. Overall, the report paints a solid picture of the US consumer and of inflation finally reaching the Federal Reserve’s 2% objective, perhaps faster than the central bank had hoped.”
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