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Economy in Brief
U.S. ISM Services PMI Falls in June to the Lowest Level since May '20
The U.S. ISM Services PMI fell to 55.3 in June...
May JOLTS: Openings, Hiring Slipped, Separations Edged Up
Job openings fell 427,000 in May to 11.254 million...
Euro Area Retail Sales Remain Weak
The graph shows the clear trend of euro area retail sales...
U.S. Factory Orders Rise More Than Expected in May
Total factory orders rose 1.6% m/m (14.0% y/y) in May...
Composite PMIs Step Back But Most Still Show Expansion
The S&P global composite PMIs took a turn for the worse in June...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller June 25, 2021
• Goods spending continues to weaken; services strengthen.
• Increase in core prices hits twenty-year high.
• Total take-home earnings again fall sharply.
Personal consumption expenditures held steady during May (18.9% y/y) following a 0.9% April increase, revised from 0.5%. A 0.4% rise had been expected in the Action Economics Forecast Survey. Adjusted for price inflation spending declined 0.4% (+14.5% y/y) after rising 0.3% in April. The decline in real outlays reflected a 4.3% drop (+25.2% y/y) in spending on durable goods. The decline was paced by an 8.5% weakening (+24.0%) in spending on motor vehicles & parts after rising 2.8% in April. Home furniture & appliances purchases weakened 3.4% (+19.9% y/y) in May after falling 1.4% in April. Spending on recreational goods & vehicles also fell 2.2% (+16.0% y/y) after a 1.5% April weakening. Nondurable goods spending eased 0.5% (+12.1% y/y) for a second consecutive month. Real clothing spending weakened 1.0% (+48.6% y/y) after a 1.5% fall. Food & beverage sales fell 0.8% (+4.2% y/y) after weakening 0.9% while spending on gasoline rose 2.3% (21.1% y/y) after gaining 1.0%. Working 0.4% higher (13.3% y/y) were real outlays on services after a 0.6% April rise. Recreation services outlays surged 3.2% (90.6% y/y), the fifth month of strength in the last six. Restaurant & hotel spending strengthened 1.0% (56.0% y/y), also the fourth month of strong increase in the last five months. Transportation service outlays improved 0.2%, up by roughly one-third y/y, after a 0.9% decline. Real health care outlays improved 0.2% (18.7% y/y) last month and housing & utilities spending improved 0.2% (1.0 % y/y).
The PCE chain price index increased 0.4% (3.9% y/y) last month following two straight months of 0.6% increase. The price index excluding food and energy improved 0.5% (3.4% y/y) after strengthening 0.7%. Durable goods prices rose 1.6% (6.7% y/y) while nondurable costs edged 0.1% higher (4.6% y/y). Services prices rose 0.3% (3.1% y/y) following two straight months of 0.5% rise. Energy prices were roughly steady (27.4% y/y). Food & beverage prices rose 0.3% (0.4% y/y) after a 0.4% gain.
Personal income weakened 2.0% (+2.8% y/y) after falling an unrevised 13.1% in April. A 2.8% decline had been expected. Transfer payments fell 11.7% (-22.3% y/y) following April's 41.2% decline after the issuance $1,400 federal government stimulus payments in March. Wages & salaries strengthened 0.8% (13.8% y/y). Along with payroll employment, it was the third straight month of strong growth. Proprietors' income surged 2.7% (30.2% y/y), the fifth straight month of strong gain. Rental income rose 0.8% (4.3% y/y) for the third straight month. Earnings on assets rose 0.4% (0.9% y/y) as dividend income rose 0.5% (-0.3% y/y) and interest income improved 0.3% (1.8% y/y). Disposable personal income fell 2.3% (+1.5% y/y) last month after weakening 14.6% in April. Adjusted for price inflation, disposable income fell 2.8% (-2.3% y/y) after falling 15.1% in April.
The personal savings rate declined to 12.4% in May from 14.5% in April. The rate reached a record high 33.7% in April of last year. The level of personal saving fell by roughly one-half y/y in May.
The personal income and consumption figures are available in Haver's USECON database with detail in the USNA database. The Action Economics figures are in the AS1REPNA database.
Personal Income & Outlays (%) | May | Apr | Mar | May Y/Y | 2020 | 2019 | 2018 |
---|---|---|---|---|---|---|---|
Personal Income | -2.0 | -13.1 | 20.9 | 2.8 | 6.3 | 3.9 | 5.3 |
Wages & Salaries | 0.8 | 1.0 | 1.0 | 13.8 | 0.7 | 4.7 | 5.0 |
Disposable Personal Income | -2.3 | -14.6 | 23.4 | 1.5 | 7.2 | 3.7 | 5.8 |
Personal Consumption Expenditures | 0.0 | 0.9 | 5.0 | 18.9 | -2.7 | 3.9 | 4.9 |
Personal Saving Rate | 12.4 | 14.5 | 27.6 | 24.7 (May '20) | 16.4 | 7.5 | 7.8 |
PCE Chain Price Index | 0.4 | 0.6 | 0.6 | 3.9 | 1.2 | 1.5 | 2.1 |
Less Food & Energy | 0.5 | 0.7 | 0.4 | 3.4 | 1.4 | 1.7 | 2.0 |
Real Disposable Income | -2.8 | -15.1 | 22.8 | -2.3 | 6.0 | 2.2 | 3.6 |
Real Personal Consumption Expenditures | -0.4 | 0.3 | 4.4 | 14.5 | -3.9 | 2.4 | 2.7 |