Investing.com – Both U.S. consumer spending core PCE prices rose in line with market expectations in May, official data showed on Wednesday.
In a report, the Commerce Department said that personal spending increased by a seasonally adjusted 0.4% last month, matching expectations, while April’s number was revised up to a gain of 1.1% from a previously reported rise of 1.0% that had already been its largest increase in seven years.
Consumer spending is the single biggest source of U.S. economic growth, accounting for as much as two-thirds of economic activity.
Personal income, meanwhile, rose by a seasonally adjusted 0.2%, below forecasts for a 0.3% gain and after rising 0.5% a month earlier. April’s data was revised from an initial advance of 0.4%.
Meanwhile, the core PCE price index inched up 0.2% last month, matching expectations and April’s increase.
The core PCE price index rose at an annualized rate of 1.6%, in line with forecasts and a repeat of April’s gain.
The Federal Reserve uses core PCE as a tool to help determine whether to raise or lower interest rates, with the aim of keeping inflation at a rate of 2% or below.
Immediately following the report, EUR/USD was trading at 1.1094 from around 1.1085 ahead of the release of the data, GBP/USD was at 1.3442 from 1.3441 earlier, while USD/JPY was at 102.70 from 102.64 earlier.
The US dollar index, which tracks the greenback against a basket of six major rivals, was at 95.93, compared to 95.94 ahead of the report.
Meanwhile, U.S. stock futures pointed to a higher open. The blue-chip Dow futures rose 110 points, or 0.64%, the S&P 500 futures gained 13 points, or 0.64%, while the tech-heavy Nasdaq 100 futures advanced 28 points, or 0.65%.
Elsewhere, in the commodities market, gold futures traded at $1,323.45 a troy ounce, compared to $1,323.95 ahead of the data, while crude oil traded at $48.30 a barrel from $48.27 earlier.