* Personal consumer expenditure rose 0.3% in August 2013 to meet market expectations and build on the upwardly revised 0.2% increase recorded in July (initially reported as 0.1%).
* On a volumes basis, personal spending increased by 0.2% in August following the upwardly revised 0.1% increase in July (previously reported as flat).
* Personal income rose 0.4% in August, which was in line with market expectations. The savings rate edged upward to 4.6% from 4.5% in July.
Nominal PCE rose 0.3% in August 2013 to build on July’s upwardly revised 0.2% increase (initially reported as 0.1%). Household spending on durable goods led the monthly increase in August, up 0.5% in the month, while non-durable goods consumption was unchanged following gains of 0.9% and 1.1% in July and June, respectively. Spending on services rose 0.4% in August to more than reverse the previous month’s 0.1% decline.
On a volumes basis, PCE rose 0.2% in August as increases in real spending on durable gods (0.8%) and services (0.2%) more than offset weakness in spending on non-durable goods (-0.2%). The PCE deflator rose 1.2% on a year-over-year basis in August, which was down from July’s 1.3% pace. In contrast, the annual increase in the core PCE deflator edged up to 1.2% in August from 1.1% in July.
Nominal personal income rose 0.4% in August following an upwardly revised gain of 0.2% in July (initially reported as 0.1%) and increases of 0.3% in each of June and May. With income growth outpacing that of spending, the personal savings rate edged upward to 4.6% in August from 4.5% in the previous month.
Data for the current quarter point to the personal spending remaining fairly subdued and today’s report is consistent with our call for real PCE growth again to come in below 2% in the third quarter of 2013 following the 1.8% annualized quarterly increase recorded in the second quarter. Importantly, however, the ongoing improvement in household incomes combined with indications that consumer confidence has largely maintained the sharp gains made during the summer despite rising uncertainty in the economic outlook-related US fiscal machinations supports our view that the underlying momentum in consumer spending will continue until the end of 2013 and carry into next year. We anticipate that household spending growth will see a modest acceleration from the lacklustre rates posted in the last year and underpin a pickup in activity in the economy as a whole during the forecast horizon.
RBC