In February, US personal income rose by only half the pace expected and also the previous figure was downwardly revised. Personal income rose by 0.2% in February, while an increase by 0.4% was expected. The January outcome was downwardly revised from 0.3% to 0.2%. Personal spending, on the contrary, surprised on the upside of expectations. In February, personal spending rose by 0.8% M/M, while an increase by 0.6% M/M was expected. The January outcome was revised from 0.2% M/M to 0.4% M/M. The PCE deflator rose by 0.3% M/M, while core PCE increased by 0.1% M/M in February. The savings rate dropped sharply in February to 3.7%, while it was 4.3% in January and 5% one year ago. Income growth remains disappointingly low in the US, despite the improving labour market conditions. The pick-up in spending, on the contrary, to the highest level since September last year, is an encouraging sign for Q1 GDP growth.
The final figure of March University of Michigan consumer confidence showed a significant upward revision from the first reading. Michigan consumer confidence was upwardly revised from 74.3 to 76.2, up from 75.3 in February. The consensus was looking for only a marginal upward revision to 74.5. The details show that both the economic conditions (86.0 from 84.2) and economic outlook (69.8 from 68.0) were upwardly adjusted from the previous reading. 1-Year ahead inflation expectations eased from 4.0% Y/Y to 3.9% Y/Y. The upward revisions become a real trend in the Michigan consumer confidence indicator. It is an encouraging sign that consumer sentiment continues to improve despite accelerating inflation.
After an upward surprise in February, the US Chicago PMI weakened somewhat more than expected in March. The Chicago Purchasing Manager index dropped from 64.0 to 62.2, while the consensus was looking for a more limited correction to 63.0. The details show a mixed picture as production (68.6 from 67.8), order backlog (54.3 from 53.6) and supplier deliveries (57.8 from 57.7) improved slightly. Inventories rose from 49.6 to 57.4, while new orders (63.3 from 69.2) and employment (56.3 from 64.2) weakened in March. Cost pressures picked further up during March as prices paid rose from 65.6 to 70.1. Almost for a year, the Chicago PMI is hovering sideways around the (high) 60-level. After the improvement in February, the index is again closer to the 60-level, showing ongoing strong momentum.