The Fed’s preferred price gauges came in mostly as expected in this week’s final top-tier US macro release, even as the report was a little warm in places.
Officially, the core PCE price gauge was in line with estimates, rising 0.2% for June from the prior month (unrounded 0.18182%). But in light of the very favorable June CPI print and a spate of generally softer macro data, some market participants were probably hoping for a downside surprise on the PCE price updates. Until this week’s GDP release, that is.
The upside to consensus (2.9% versus 2.7% expected) on the quarterly core PCE index released on Thursday suggested Friday’s breakdown for June might not show the expected deceleration (to 2.5%) on the YoY pace of the monthly readings. Sure enough, core prices rose 2.6% in June from the same month a year ago, unchanged from May’s 12-month rate.
May’s MoM pace on the core gauge was revised higher to 0.1271% from an initially-reported 0.0828%.
The headline gauge rose an as-expected 0.1% MoM but likewise printed slightly ahead of consensus on the 12-month pace, at 2.5% (versus 2.4% seen, although expectations might’ve drifted up to 2.5% by Friday).
The MoM gain on the “supercore” metric Jerome Powell’s watching like a — err — like a hawk, was 0.2%, the same as May, and tolerable.
I should note that May’s month-to-month reading on that gauge was revised up to 0.2% from 0.1%.
Is any of this material? In a word, “no.” In two, “not really.” Recall that although June CPI was benign, PPI data released a day later nodded in the direction of a little upside (versus the more dovish Street calls) for the PCE prices prints and, again, the GDP release telegraphed some marginal re-heating for Friday’s personal income and spending release.
On the personal spending front, the nominal print was inline at 0.3%, while real spending rose a softer-than-expected 0.2%. Personal income rose just 0.2%, half the gain consensus expected. The saving rate was 3.4%, the lowest since December of 2022.
This was the last key release the Fed will see before next week’s policy gathering. And there was nothing in it to change the narrative.
