Preview: Due July 30 - U.S. June Personal Income and Spending - PCE Prices not quite as soft as CPI
June’s personal income and spending report may be overshadowed by the Q2 GDP report released at the same time. We expect a subdued 0.1% increase in core PCE prices, with overall PCE prices down by 0.1%, leaving gains of 0.3% in both personal income and personal spending looking respectable in real terms.
Core CPI prices were unchanged in June. We do not expect core PCE prices to be quite as soft as this, with core PCE prices having tended to outperform core CPI in the year to date. However a subdued PPI as well as the CPI suggests core PCE prices will be significantly slower than recent trend.
Overall CPI fell by 0.4% but PCE prices are less sensitive to energy than CPI and we expect overall PCE prices to fall by only 0.1%. This would see yr/yr growth slow to 3.7% from 4.1% for overall PCE prices, with the core rate ex food and energy at 3.2% from 3.4%.
The non-farm payroll detail implies a 0.4% rise in wages and salaries, mostly on a 0.3% rise in average hourly earnings. We expect overall personal income to rise by only 0.3% with farm income set to slip from a strong May that was lifted by government payments.
Retail sales increased by 0.2% with the data looking healthy outside a price-related fall in gasoline. We expect a 0.3% increase in service spending, just enough to lift overall personal spending to 0.3%.
