Preview: Due July 31 - U.S. June Personal Income and Spending - Core PCE Prices to outpace Core CPI
June’s personal income and spending report will be largely old news at the time of the release, with Q2 totals due in the GDP report due the day before. Ahead of the GDP report we expect a stronger 0.3% increase in core PCE prices, with a weak 0.2% rise in personal income but a solid 0.5% rise in personal spending.
CPI rose by 0.3% overall in June but a slightly lower than expected 0.2% ex food and energy. We expect June core PCE prices to be a little firmer than core CPI with PCE auto prices to be less negative than CPI auto prices were. Excluding autos, CPI goods data did show some hints that tariffs were starting to feed through.
This would see yr/yr growth in core PCE prices pick up to 2.8% from 2.7%. We expect overall PCE prices to rise by 0.3%, matching the CPI, with PCE prices getting less of a lift from gasoline than did the CPI. This would see overall PCE prices rising to 2.5% yr/yr from 2.3%.
Slower growth in average hourly earnings and a dip in the workweek in June’s non-farm payroll breakdown suggests a below trend 0.1% increase in wages and salaries. We expect the other components of personal income to rise in line with a moderate underlying trend, after a dip in May corrected strength in the first four months of the year led by various government benefits.
Retail sales rose by 0.6% in June but the contribution to personal spending may be a little less than that with autos having been stronger in the retail sales data than industry auto data implied. However we expect a stronger 0.5% rise in services to leave overall consumer spending up by 0.5% increase, following two weak months in which equity weakness may have weighed on spending.
