U.S. Core PCE Price up 2.8% Y/Y, While Real Spending Edged Up in October

The PCE chain price index rose 0.2% in October, following an unrevised 0.2% rise in September. The y/y rise was 2.3%, up from 2.1% in September. The price index excluding food and energy rose 0.3% last month after a similar 0.3% rise in September and after three straight months of 0.2% increases. The y/y rise was 2.8% in October, up from 2.7% in September and during Q3. Durable goods prices rose 0.1% (-1.6% y/y) in October, down from 0.3% (-1.9% y/y) in September. Motor vehicle & prices rose 0.9% (-1.3% y/y) following a rise of 0.3% (-2.4% y/y) in September, and after declining steadily since June. Recreational product prices declined 0.5% (-2.0% y/y) last month, after declining 0.3% (-2.0% y/y) in September, while home furnishings costs were unchanged (-2.6% y/y) after rising 0.5% (-2.7% y/y). Nondurable goods prices eased 0.1% (-0.6% y/y) in October after a decline of 0.4% (-0.8% y/y) in September, with clothing prices declining 1.4% (+0.1% y/y) last month after a 0.7% (1.4% y/y) gain. Services prices increased 0.4% (3.9% y/y) in October after rising 0.3% (3.7% y/y) the prior month. Housing & utility prices rose 0.4% (4.9% y/y) after similar monthly and y/y rises in September, and services prices excluding energy & housing increased 0.4% (3.5% y/y) in October after a rise of 0.3% (3.2% y/y) in September. Healthcare prices rose 0.1% (2.5% y/y) in October. Food & beverage prices were unchanged (1.0% y/y) in October, while energy goods & services prices fell 0.1% (-5.9% y/y).

Personal consumption expenditures (PCE) increased 0.4% (5.4% y/y) in October, after a 0.6% (5.3% y/y) rise in September. A 0.4% increase had been expected in the Action Economics Forecast Survey. When adjusted for price changes, PCE increased 0.1% (3.0% y/y) last month, after rising 0.5% (3.1% y/y) in September.

Real spending on durable goods rose 0.3% (4.6% y/y) in October after a 1.1% (3.6% y/y) advance in September. Real spending on motor vehicles rose 0.1% (2.3% y/y) during October after a 1.7% (0.3% y/y) rise the prior month. Real outlays on furnishings & durable household equipment declined 0.2% (+5.9% y/y) in October, following a 0.7% (5.5% y/y) rise in September, while real spending on recreational goods & vehicles rose 0.8% (6.0% y/y) last month, after a 1.2% (5.1% y/y) rise the prior month. Spending on other durable goods rose 0.5% (5.5% y/y) after rising 0.3% (5.3% y/y) in September.

Real spending on nondurable goods edged down 0.1% (2.2% y/y) in October, after rising 1.1% (2.6% y/y) during September. Real clothing and footwear purchases rose 0.8% (1.7% y/y) last month, following a decline of 0.2% (+0.6% y/y) in September. Real food & beverage purchases rose 0.2% (2.0% y/y) in October, after a rise of 0.8% (1.9% y/y) in the prior month. Real outlays on gasoline & other energy products declined 0.4% (-0.3% y/y), after a rise of 0.5% (1.6% y/y) in September. Real spending on other nondurable goods declined by 0.6% (3.3% y/y) last month, following a 2.0% (4.1% y/y) rise in September.

Real spending on services edged up 0.2% (3.0% y/y) in October, following a similar rise of 0.2% (3.2% y/y) in September. Real spending on housing & utilities eased 0.1% (0.9% y/y) last month, after a 0.1% (1.0% y/y) rise the prior month, while real healthcare spending rose 0.4% (5.6% y/y), after rising 0.5% (6.1% y/y) in September. Real spending on food services & accommodations rose 0.3% (1.2% y/y) in October, after a 0.7% (1.2% y/y) rise the prior month, while real spending on financial services & insurance gained 0.1% (4.0% y/y) after a 0.3% (3.6% y/y) gain the prior month. Real spending on transportation services eased 0.1% (+3.8% y/y) in October, after a decline of 1.0% (+3.9% y/y) in September. Recreation spending edged down 0.1% (+2.8% y/y) after a similar 0.1% (+2.9% y/y) decline in September. Other services spending was flat in the month (1.4% y/y) in October after easing 0.2% (2.4% y/y) the prior month.

Personal income rose 0.6% (5.3% y/y) in October, after a rise of 0.3% (5.0% y/y) in September. A 0.3% gain was expected. Wages & salaries rose 0.5% (5.6% y/y) last month following a rise of 0.4% (5.3% y/y) in September. Rental income rose 0.4% (5.4% y/y) last month, after a similar 0.4% rise (5.6% y/y) in September. Proprietors’ income rose 0.4% (2.1% y/y) following a 0.5% (+1.9% y/y) decline in September. Income from assets rose 1.0% (1.9% y/y) after edging down 0.1% (+1.9% y/y), and current transfer receipts rose 0.7% (8.0% y/y) in October, the same monthly rise of 0.7% (7.3% y/y) than in September. Similarly, government social benefits rose 0.7% (7.8% y/y), after a 0.7% (7.2% y/y) in September.

Disposable personal income increased 0.7% (5.1% y/y) in October, following a rise of 0.3% (4.8% y/y) in September. After adjusting for price changes, disposable income improved 0.4% (2.7% y/y) after edging up 0.1% (2.6% y/y) in September.

The personal saving rate rose to 4.4% in October, from 4.1% in September. The rate was down from a January high of 5.5%. Personal saving rose 8.4% (2.3% y/y) in October, after falling 6.6% (-2.0% y/y) in September.

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.