US personal consumption spending rose 0.2% month-on-month in October – PCE core rose 3.5% year-on-year

Growth in U.S. personal consumption expenditures (PCE) in October slowed from the previous month as inflation continued to slow. This suggests that the economy is shifting to a lower gear.

The PCE Composite Price Index was unchanged from the previous month, with market expectations for a 0.1% increase. Reflecting lower energy prices. This was a 3% increase compared to the same month last year, the smallest increase since March 2021. That was lower than market expectations of a 3.1% rise, but still above the U.S. Federal Reserve’s 2% target.

The latest PCE data is consistent with expectations that the U.S. economy will slow in the fourth quarter from October to December (fourth quarter) after recording the highest growth in about two years in the previous quarter. With demand cooling, the U.S. Federal Reserve is likely to become more confident that inflationary pressures will continue to subside, supporting expectations that interest rate hikes will be halted.

“The Fed remains on hold for now, but a shift toward lower rates is on the horizon,” said Bill Adams, chief economist at Comerica Bank. “Inflation is clearly slowing and the job market is weakening faster than expected,” he said.

US financial authorities are paying attentionExcludes housing and energyThe service industry price index rose 0.1% month-on-month, matching the smallest increase so far this year.