Market Wire - "Anti-Goldilocks" Personal Spending Data Smacks Dollar
American households slowed spending last month as consumer confidence plunged - and the Federal Reserve’s preferred inflation measure continued its rise. Data released by the Bureau of Economic Analysis this morning showed inflation-adjusted household outlays climbing just 0.2 percent in May. In real terms, spending fell 0.4 percent - roughly corresponding with a previously-reported -0.3 percent month-over-month fall in retail sales. In unadjusted terms, personal income rose 0.5 percent month-over-month, while wages and salaries increased at the same pace.
The core personal consumption expenditures index - the Federal Reserve’s preferred inflation measure - rose 0.3 percent from April, up 4.7 percent year over year. This was slightly softer than consensus estimates which were set at 0.4 percent and 4.8 percent, respectively - but remains far above the central bank's comfort zone.
Yields fell after the release, and the greenback dropped as odds on a hard landing in the US economy grew.
The Canadian economy expanded at the expected pace in April, with activity rising 0.3 percent month-over-month. Numbers released by Statistics Canada this morning show the services sector growing 0.1 percent while goods-producing industries jumped 0.9 percent - with real estate activity slowing as mining and energy extraction sectors surged on higher global prices. The loonie jumped even as a preliminary estimate suggested that the economy could shrink 0.2 percent in May.