November Income and Expenditure Data Released in the U.S.
In November, significant data such as personal spending and core PCE price index in the U.S. came close to market expectations. Real personal spending increased by 0.3% in November, demonstrating stronger performance compared to a 0.1% increase in the previous month. Meanwhile, the core PCE price index rose by 2.8% year-on-year, while the market expectation was 2.9%. Although this data suggests that inflationary pressures persist, coming in slightly below expectations was interpreted as somewhat positive. On a monthly basis, the core PCE price index rose by 0.1%, down from 0.3% in October.
Personal income and spending below expectations Seasonally adjusted personal spending in November increased by 0.4%, slightly below expectations, as the market anticipated a 0.5% increase. This indicates a limited improvement in consumer confidence. In the U.S., personal income rose by 0.3% in November, falling short of the 0.4% expectation, following a 0.6% increase recorded in October.
On the other hand, the PCE price index increased by 2.4% year-on-year, exceeding the previous 2.3%, while the monthly increase was 0.1%. This rate fell below the expected 0.2% monthly increase, suggesting that inflation is progressing at a slower pace than anticipated. Key indicators of the U.S. economy continue to provide clues about the overall condition of the markets and the direction of the economy. Particularly, the PCE price index stands out as the inflation measure the Fed pays the most attention to and has a significant impact on future monetary policies.
NY Fed President Williams: PCE data is encouraging Following the release of the U.S. economic data for November, New York Fed President John Williams made comments. Williams stated that the recently announced Personal Consumption Expenditures (PCE) data is "encouraging" and emphasized that what he observed is consistent with the disinflation process.
He noted, "The latest PCE value provides encouraging signals that our efforts to bring inflation under control are moving in the right direction." He also drew attention to the continued disinflation process and that economic indicators are moving in harmony with this process. Following the release of the PCE data, a downward trend was observed in the dollar index. DXY accelerated its daily decline and fell below the 108 level in the last hour.
The dollar index, following a notable spike after the Fed's interest rate decision mid-week, rose to 108.5 by the end of the week, marking a 1.5% increase on a weekly basis and testing its highest level in two years. Following the PCE data that came in slightly below expectations, the retreat in DXY accelerated.