U.S. personal income comes in above expectations in May. Sequentially, personal income rose 0.5 percent, as compared with consensus expectations of a rise of 0.3 percent. Nominal personal spending rose 0.4 percent, in line with expectations. Moreover, April’s data for spending was upwardly revised to 0.6 percent from 0.3 percent.
Stripping the effect of price changes, real spending rose 0.2 percent, somewhat softer than expectations for a 0.4 percent print. Nevertheless, real spending growth in April was upwardly revised to 0.2 percent from a previously flat print. Goods spending was up 0.4 percent, owing to a 1.6 percent growth in durables. Spending on services was up 0.2 percent in May.
The personal consumption price deflator was up 0.2 percent on the month and rose 1.5 percent year-on-year basis. Core PCE rose 0.2 percent sequentially and 1.6 percent year-on-year. The personal saving rate remained stable at 6.1 percent in May, although the saving rate for April was downwardly revised a bit.
April data’s upward revision guarantees that the real spending growth is on track for an above 3 percent growth in the second quarter. Solid consumer spending is expected to be the key to ensuring that GDP growth holds near trend this quarter, stated TD Economics in a research report.
“Core inflation held steady in May, a sign that temporary factors are likely still weighing on price growth. This remains the key metric on the Fed's dashboard as it plans the timing of its first of likely two rate cuts this year”, added TD Economics.
At 17:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was slightly bullish at 55.0489 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex
