US Personal Income: A solid picture of the consumer – Standard Chartered

Analysts at Standard Chartered, point out that the June PCE report was solid but not spectacular and they explained that the Core PCE rose as cost of goods accelerated.

Key Quotes:  

“June personal consumption expenditure (PCE) data printed a touch below our and market expectations: core PCE rose 1.90% y/y and 0.11% m/m. Core goods prices accelerated for the fifth straight month, rising 1.4% y/y.”

“Core goods prices remains an area to watch as pressures from producer prices, which have persisted for some months, seeped into core inflation in June, and are likely to help sustain increases in the core index even as favourable base effects from low prints last year begin to abate.”  

“The employment cost index (ECI), despite reporting a slightly softer-than-expected 0.6% m/m, continued to underscore a steadily improving worker compensation backdrop; private-sector salaries rose 2.9% y/y and benefits 2.8% y/y.”

“Employers seem to be finding some success in attracting staff through a balance of wage and benefit incentives, keeping overall employment costs manageable so far, even with the economy growing robustly. The report paints and a solid albeit benign outlook for inflation.”