US consumer spending eased more than expected in August while the Federal Reserve's preferred inflation metric rose year over year but met Wall Street's estimates, government data showed Friday. Personal consumption expenditures growth slowed to 0.2% last month from 0.5% in July, the Bureau of Economic Analysis said in a report.
The latest print came in below the Bloomberg-polled consensus for a 0.3% increase. Goods spending declined 0.1% versus a rise of 0.9% in July, as durables and nondurables each fell into negative territory. Services spending growth advanced to 0.4% from 0.3%. "Consumer spending is expected to remain subdued as the labor market continues to cool, though a greater savings buffer than previously thought could help to temper the slowdown," TD Economics Economist Shernette McLeod said. The annual headline PCE price index decelerated to 2.2% in August, trailing the Street's forecast for a 2.3% gain.
On a sequential basis, inflation eased to 0.1% in August following a 0.2% rise the month before, in line with the market estimate. The Fed's preferred core measure, which excludes food and energy, rose 2.7% annually in August, compared with 2.6% in July, meeting the consensus view. Sequentially, the core measure fell to 0.1% from 0.2%, which was analysts' expectation. "The Fed's preferred core measure continues to head in the right direction, even though base effects are boosting the yearly pace," according to McLeod.
"Given that inflation continues to remain contained, the Fed will be paying even keener attention to labor market developments, with September payrolls data released next Friday as they calibrate further policy action." Last week, the Fed lowered its benchmark lending rate by 50 basis points. Data released earlier this week by the BEA showed that economic growth held steady in the second quarter, while consumer spending was unexpectedly revised lower..