US data reviewed: no strong pick-up in PCE - Nomura

Analysts at Nomura offered a review of the US data.

Key Quotes:

"Personal income and spending: 

Given that Q4 GDP number was already released last Friday, an important piece of information in today's personal income/spending report is the monthly profile of personal consumption. Personal income was up 0.3% m-o-m in December and the prior month was revised higher by 0.1pp to a 0.1% increase (Nomura: 0.5%, Consensus: 0.4%). Nominal spending was up 0.5% m-o-m in December, in line with expectations (Nomura: 0.6%, Consensus: 0.5%). Real spending was up 0.3%, consistent with expectations, with steady growth in spending on both goods and services. 

PCE deflator: 

There were no strong indications of pick-up in core PCE price index. Core PCE inflation accelerated only slightly to 0.1% (0.112% unrounded) m-o-m in December from 0.018% in the prior month (Nomura: 0.082%, Consensus: 0.1%). However, this increase was not enough to affect the y-o-y rate, which was unchanged at 1.7% on a rounded basis. The headline PCE price index was up 0.2% m-o-m in December, mostly in line with expectations (Nomura: Consensus: 0.2%), driven by a strong 1.7% increase in energy prices. The y-o-y rate of the headline PCE index reached 1.6% from 1.4% in the prior month, the strongest pace since July 2014. 

Pending home sales: 

Pending home sales increased by 1.6% m-o-m in December, stronger than expectations (Consensus: 1.0%), following a 2.5% decline in November. This measure of home sales is a forward-looking indicator based on contract signings on previously owned home and tends to lead existing home sales data by about two months, which measure the volume of sales contract closings. Thus, a modest pick-up in the latest reading of pending home sales points to some bounce back in existing home sales in coming months.