Personal consumption expenditure (PCE) inflation was up +0.3% in March with yearly PCE inflation at +2.0%. The yearly core PCE price index, which excludes food and energy and is the inflation measure used by the Federal Open Markets Committee (FOMC), increased from +1.6% in February to +1.9% in March, edging close to the FOMC target +2.0% rate. The seasonally adjusted annual rate (SAAR) of personal income was up $47.8 billion (+0.3%), with the SAAR for expenditures rising by +$61.7 billion (+0.4%), and the personal savings rate dropping to 3.1% from 3.3%. Spending increased in March for services (+0.6%), and spending on durable goods increased +0.8% after declines in January and February, but spending on nondurable goods dropped -0.2% for its second monthly decline.

The FOMC released the minutes of their May meeting, which ended with a unanimous vote to leave the prime interest rate unchanged at 1.5% - 1.75%, increasing the possibility of a rate hike at their next meeting in June in order to stay on track with their economic policy projections. Changes to the text of the press release included noting that while household spending moderated from Q4, business fixed investment continued to grow strongly, that job gains changed from “strong” to “strong, on average”, and that inflation had now “moved close” to its 2% target.

There were 164,000 jobs created in April, dropping the unemployment rate from 4.1% to 3.9%, with average hourly earnings rising +2.6% (+$0.04) to $26.84, up $0.67 for the year. The more comprehensive U-6 unemployment measure, which counts marginally attached and part time workers, dropped -0.2% to 7.8%, and is down -0.8% from 8.6% in April 2017. Jobs were added in professional and business services (+54,000), health care (+24,000), manufacturing (+24,000), and mining (+8,000). Based on education, unemployment was 5.9% for workers without high school diplomas, dropped to 4.3% for workers with high school diplomas, was +3.5% for workers with some college, and was 2.1% for workers with bachelor’s degrees or higher.