US consumer spending for May comes in softer than expected, PCE price gains slow
By Alexander Bueso
Date: Friday 28 Jun 2024
(Sharecast News) - Americans spent a bit less than anticipated last month even as price pressures slowed as anticipated.
According to the Department of Commerce, in seasonally adjusted terms personal incomes rose at a month-on-month pace of 0.5% in May (consensus: 0.4%).
Personal consumption expenditures however increased by just 0.2% (consensus: 0.3%) and the prior month's rise was revised down by a tenth of a percentage point to 0.1%.
As forecast by economists, the year-on-year rate of increase in the headline PCE price deflator slowed from 2.7% in April to 2.6%, while at the core level it fell from 2.8% to 2.6%.
The personal savings rate meanwhile improved from 3.7% to 3.9%.
"There is a good chance that core PCE inflation will fall to 2.5% in June, although unfavourable base effects make a further decline in the second half of this year unlikely," said Paul Ashworth, chief North America economist at Capital Economics.
"[...] Taken together, the return to the earlier disinflationary trend and new-found weakness in real activity, are both consistent with the Fed cutting interest rates as soon as this September."
-- More to follow --
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