Consumer spending in US likely to have slowed in May

Spending in the US is expected to have gained in May following a sharp increase in April, but at a slower pace. It is likely to have grown 0.3 percent, as compared with the solid growth of 1 percent in the prior month, said Societe Generale in a research report. However, the larger takeaway will be that the real PCE in the second quarter is expected to on a growth rate of 3.5 percent to four percent.

The US Fed officials are likely to cheer up after seeing the real PCE rebound in the second quarter of this year. In the mean time, personal income might have increased 0.2 percent last month, according to Societe Generale. Given the marginal growth in private payrolls in May and the weak growth average hourly earnings, private wages and salaries are expected to have advanced just 0.2 percent in the month.

Meanwhile, both the core PCE deflators and the headline inflation are likely to have accelerated 0.2 percent. A reading consistent with the estimate might push the headline year-on-year rate down to 1 percent from 1.1 percent. Un-rounded core inflation is likely to come in at 0.16 percent and at a year-on-year rate of 1.6 percent.