Consumption went up by USD 18 billion from July, due to a 0.3 percent gain in services (0.2 percent in July) and a 0.3 percent rise in nondurables (0.2 percent in July). In contrast, spending on durables declined 1.1 percent, following a 1.1 percent rise in July.
Real PCE spending fell USD 8.4 billion due to a decrease in spending for goods that was partially offset by a rise in spending for services. Within goods, spending on new motor vehicles was the leading contributor to the decrease. Within services, healthcare spending was a leading contributor to the increase.
Meanwhile, the rise in personal income primarily reflected an increase in government social benefits to persons and compensation of employees. Disposable personal income (DPI) increased 0.1 percent while real DPI decreased 0.1 percent.
The core personal consumption expenditures price index, the Fed’s preferred inflation gauge which excludes volatile food and energy prices, rose 0.1 percent month-on-month, in line with estimates and the same as in the previous three months. Year-on-year, it was up 1.3 percent, following a 1.4 percent rise in July. It is the lowest annual rate since November of 2015.