U.S. Core PCE Price Gain Cools in November; Real Spending Rise Picks Up
by:Tom Moeller
|in:Economy in Brief
Summary
- Price index held back by steady goods costs and slower services price rise.
- Real spending growth concentrated in goods.
- Disposable income growth slows.
The PCE chain price index edged 0.1% higher in November, following unrevised gains of 0.2% in both of the prior two months. The y/y rise moved up to 2.4% after deceleration in the prior three months. The price index excluding food and energy also inched up 0.1% last month, after two months of 0.3% gain. The y/y rise held at 2.8% in November, up from a 2.7% low throughout Q3.
Durable goods prices held steady (-1.1% y/y) in November, after a 0.1% October uptick. Motor vehicle & prices jumped 0.7% (-1.4% y/y) following a 0.9% rise. Recreational product prices declined 0.6% (-1.4% y/y) last month, after declining in each of the prior three months, while home furnishings & appliance costs were unchanged (-1.4% y/y) as they were in October.
Prices of nondurable goods were unchanged both m/m and y/y last month after declines in each of the prior three months. Clothing prices rose 0.1% (0.9% y/y) after falling 1.4%. Food prices rose 0.2% (1.4% y/y) following no change and gasoline & oil prices rose 0.5% (-8.6% y/y) after a 1.0% decline.
Services prices increased 0.2% (3.8% y/y) in November, after rising 0.4% in the prior month. Housing & utility prices rose 0.2% (4.6% y/y) after 0.4% gains in the prior two months, and services prices excluding energy & healthcare increased 0.2% (4.2% y/y) in November after a 0.4% gain. Healthcare prices rose 0.2% (2.5% y/y) as did housing & utilities costs (4.6% y/y). Transportation prices declined 0.5% (+1.5% y/y) while hotel & restaurant prices strengthened 0.7% (3.5% y/y). Recreation services costs rose 0.3% (3.3% y/y) after a 0.6% rise.
**Personal consumption expenditures (PCE) **increased 0.4% (5.5% y/y) in November, after a 0.3% October rise, revised from 0.4%. A 0.5% increase had been expected in the Action Economics Forecast Survey. When adjusted for price changes, PCE increased 0.3% (2.9% y/y) last month, after edging 0.1% higher in October.
Real spending on durable goods strengthened 1.8% (5.7% y/y) in November, after a 0.2% October rise. Real spending on motor vehicles increased 2.4% (5.0% y/y), after easing 0.3% in October. Real outlays on furnishings & durable household equipment rose 0.6% (4.7% y/y) in November, following a 0.2% decline in September, while real spending on recreational goods & vehicles jumped 2.7% (7.7% y/y) last month, after a 0.4% rise in October. Spending on “other” durable goods eased 0.1% (4.5% y/y) after strengthening 1.3% in October.
Nondurable goods spending in real terms improved 0.2% (2.2% y/y) in November, after falling 0.2% during October. Real clothing and footwear purchases jumped 1.3% (2.4% y/y) last month, following a 0.9% gain (+0.6% y/y) in October. Real food & beverage purchases fell 0.3% (+1.2% y/y), after easing 0.1% in the prior month. Real outlays on gasoline & other energy products declined 0.6% (+0.4% y/y), after falling 0.5%. Real spending on “other” nondurable goods rose 0.4% (3.4% y/y) last month, following a 0.6% decline.
Real spending on services edged 0.1% higher (2.7% y/y) in November, following two months of 0.2% increase. Real spending on housing & utilities eased 0.1% (0.9% y/y) last month, after holding steady in October, while real healthcare spending rose 0.2% (5.3% y/y), after rising 0.3%. Real spending on food services & accommodations weakened 0.6% (-0.3% y/y) in November, and reversed the prior month’s rise. Real spending on financial services & insurance gained 0.4% (3.4% y/y) after a 0.1% uptick. Real spending on transportation services eased slightly (+2.1% y/y) in November, after a decline of 0.1% in October. Recreation spending strengthened 1.2% (2.1% y/y) after falling 0.5% in October. Spending on “other” services slipped 0.2% (+1.1% y/y) after rising 0.3% in the prior month.
Personal income rose 0.3% (5.3% y/y) in November, after a rise of 0.7% in October, revised from 0.6%. A 0.4% gain was expected. Wages & salaries rose 0.6% (5.8% y/y) last month, following a rise of 0.5% in October. Rental income improved 0.1% (5.2% y/y), after a 0.5% October rise. Proprietors’ income edged 0.1% higher (2.4% y/y), following a 0.4% gain in October. Income from assets eased 0.1% (+1.0% y/y), after strengthening 1.0%, and current transfer receipts slipped 0.1% (+8.7% y/y) in November, after rising 0.9% in October. Government social benefits eased 0.1% (+8.6% y/y) in November, after improving 1.0% in the prior month.
Disposable personal income increased 0.3% (5.1% y/y) in November, following a rise of 0.7% in October. After adjusting for price changes, disposable income improved 0.2% (2.6% y/y), after gaining 0.5% in October.
The personal saving rate slipped to 4.4% in November, after rising to 4.5% in October. The rate remained below a January high of 5.5%. Personal saving fell 1.7% (+0.2% y/y) in November, after rising 10.3% in October.
The personal income and consumption figures are available in Haver’s USECON database with detail in the USNA database. The Action Economics forecasts are in AS1REPNA.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.