Per­sonal In­come up 0.2%; Core PCE In­creases 0.1%

The Bond Buyer - - Market News -

WASH­ING­TON -- Per­sonal in­come rose 0.2% in Au­gust, as ex­pected, while a weaker-than-ex­pected 0.1% rise in the core PCE price in­dex cut the year/year rate for core in­fla­tion growth to 1.3% from 1.4% in July, data re­leased by the Com­merce De­part­ment Fri­day morn­ing showed.

The year/year rate of growth for Au­gust core PCE prices was the low­est since Novem­ber 2015 and sug­gests lit­tle move­ment in un­der­ly­ing rate of in­fla­tion as an­a­lysts de­bate the FOMC’s pos­si­ble rate hike in De­cem­ber.

Nom­i­nal PCE was up 0.1% in Au­gust, as ex­pected. Durable goods spend­ing fell by 1.1%, cut down by weak ve­hi­cle sales. Non­durable goods spend­ing rose 0.3%, as did ser­vices spend­ing.

For in­come, there were gains were re­ported for all the ma­jor cat­e­gories, but wages and salaries were flat in the month due to soft pay­rolls and earn­ings and a drop in hours worked.

Disposable per­sonal in­come rose 0.1% in the month, while real disposable in­come fell 0.1%. The sav­ing rate held steady at 3.6% in Au­gust.

The over­all PCE price in­dex was up 0.2% in Au­gust fol­low­ing a 0.1% gain in July. How­ever, the year/year pace re­mained at 1.4% for the third straight month.

Real PCE was down 0.1% in Au­gust fol­low­ing a 0.2% in­crease in July. Af­ter in­fla­tion ad­just­ment, durable goods PCE fell 1.0% and non­durable goods PCE de­clined 0.2%, while ser­vices PCE was up 0.1%.

Through two months, real PCE was up 1.4% at an an­nual rate from the sec­ond quar­ter av­er­age

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