The $29.3 billion increase in real PCE in July reflected an increase of $18.7 billion in spending for goods and an $11.8 billion increase in spending for services. Within goods, furnishings and durable household equipment was the leading contributor to the increase. Within services, the largest contributor to the increase was spending for food services and accommodations.
Meanwhile, personal income rose 0.4 percent in July 2017, following no growth in June and above market expectations of 0.3 percent. The growth in personal income in July primarily reflected increases in wages and salaries (0.5 percent) and a recovery in personal income receipts on assets (0.6 percent vs -1.7 percent in June). Meanwhile, contributions for government social insurance, a subtraction in the calculation of personal income, rose 0.5 percent after increasing by 0.4 percent in June.
Also, 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 was up 1.4 percent from previous year.