- Richard Curtin, director of the Michigan Survey of Consumers
A closely watched core PCE inflation remained steady in June, while consumer spending and incomes suggest robust, albeit moderate economic growth. The index for personal consumption expenditures, excluding volatile food and energy prices, climbed 0.1% in June, in line with the market's forecasts and marking the third such rise in a row, according to the Department of Commerce. Measured on an annual basis, the reading was 2.3% higher, maintaining the trend since the start of the year. This should make Fed policy makers comfortable to start lifting the federal funds rate at their meeting in September. Consumer spending in nominal terms climbed 0.2% in June also matching economists' projections, and following a downwardly revised 0.7% rise in May. Still, healthier consumption allowed the world's number one economy to rebound 2.3% in the June quarter in annualized and inflation-adjusted terms. At the same time the data showed households' incomes increased 0.4% for the third month in a row, beating economists' expectations' for a 0.3% gain in June.
Meanwhile, the pace of growth in the nation's manufacturing sector weakened in July. The ISM's barometer of the US factory activity dropped to 52.7, down from 53.5 a month earlier. While the new orders sub-index rose to 56.5, prices paid subcomponent and the employment index slid to 44.0 and 52.7, respectively.
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