NEW YORK — Personal consumption expenditures (PCE) in the United States were unchanged for a second consecutive month in nominal terms in March, but the volume of spending (real PCE) rose 0.3 percent, RBC Economics reported.
Personal incomes rose 0.2 percent and the monthly saving rate rose to 5.9 percent from 5.7 percent in February and up from 5.2 percent at the end of last year.
PCE inflation declined 0.2 percent with core (ex-food and energy) prices also slipping 0.1 percent. The dip in the core price measure was the first decline since 2001, led by weaker telecom services. However, on a year-over-year basis, prices were still up 1.6 percent.
“Nominal consumer spending was flat in March but largely due to falling prices, flagged in the earlier-released March Consumer Price Index numbers,” said Nathan Janzen, RBC senior economist.
“A 0.3 percent tick increase in spending in volume terms provides the first sign that spending is bouncing back after a weak 0.3 percent annualized increase in all of the first quarter that looks decidedly out of line with underlying strength in labor markets, rising consumer confidence, and still extremely low interest rates,” he explained.
“Part of the first quarter disappointment was related to weak spending on utilities as warmer-than-usual temperatures reduced the need for home heating and the reversal as temperatures returned to normal will also support stronger spending growth in the second quarter,” he added.
“We continue to view the fundamental backdrop for consumer spending as solid, supported by ongoing improvement in labor markets, including rising wages and the stimulative stance of monetary policy,” said Janzen.
“Today’s report is in line with our monitoring that consumer spending growth will bounce back to a 2.8 percent rate in the second quarter which, along with continued growth in business and residential investment is consistent with a 2.9 percent rise in gross domestic product after the weaker-than-expected 0.7 percent first-quarter gain,” he explained.
SOURCE: RBC Economics press release