Core PCE Inflation Drops to 2 – Year Low

Personal Consumption Expenditures (PCE) for June are out this morning, coming in higher on the headline: +0.2% versus +0.1% estimated. Essentially this is the wrong direction if we want to see inflation metrics continue to tick down, but we’re well off the +1.0% highs from June a year ago, so we do see real progress here. Core PCE month over month matched the +0.2% expected, far from the frighteningly high +6.3% we saw back in April of 2021.

The Fed more often cites PCE data than any other inflation report, and within it the most quoted segment is the year-over-year headline and core. Here we see a +3.0% on headline, down a full 80 basis points (bps) from the May print, the lowest we’ve seen since March 2021. The high read on this metric was +7.0% in June of last year. Core PCE year over year — stripping out volatile food and energy costs — came in at +4.1%, a mere 10 bps below expectations, but still the lowest print since September 2021 and down half a point from the unrevised +4.6% posted the previous month.

Nominal Personal Income reached +0.3% for June, down 10 bps from estimates and 20 bps from the upwardly revised May number. Nominal Personal Spending for June was in line with expectations at +0.5%, up 30 bps from an upwardly revised +0.2% previously. Real Spending was up +0.4% — above the revised +0.1% a month earlier but well below January 2023’s +1.3%. And the Employment Cost Index for Q2 was also a tad below projections to +1.0%, and down -20 bps from the unrevised May print. February of this year brought us +1.4%, the highest of the cycle. All of these figures depict a continually cooling economy overall.

The biggest of the integrated oil & gas “supermajors,” ExxonMobil XOM, reported mixed Q2 numbers this morning, missing on the bottom line by 6 cents per share to $1.94 (and well off the year-ago pace of $4.14 per share), while outperforming estimates on the top line to $82.91 billion by +5.16%. Compared to 2022, when Q2 revenues came in at a jaw-dropping $115.68 billion, we see the results of the pullback in energy costs big time with these numbers. For more on XOM’s earnings, click here.

Competing supermajor Chevron CVX also released mixed results for its Q2 report ahead of today’s bell, but in reverse from Exxon’s: earnings of $3.08 per share beat the Zacks consensus by +4.4% (though well off last year’s Q2 earnings of $5.82 per share), while revenues of $48.9 billion was beneath expectations by -4.9%. Both Chevron and Exxon shares are down marginally on the news, adding to their year-to-date losses of -11.1% and -4.4%, respectively. For more on CVX’s earnings, click here.

Procter & Gamble PG beat on both top and bottom lines for its fiscal Q4 quarter this Friday, with earnings of $1.37 per share outpacing the Zacks consensus by 5 cents (and easily above the $1.21 per share in the year-ago quarter) for its fourth-straight quarterly earnings beat, on sales of $20.55 billion, bettering expectations by +2.66%. Shares are up +1.3% in today’s pre-market trading, adding to the marginal +0.4% P&G has earned year to date. For more on PG’s earnings, click here.

From the same household product segment, Colgate-Palmolive CL managed only its second earnings beat in the past four quarters, with earnings of 77 cents per share presenting a 2-cent beat. Its top line also came in ahead of expectations, $4.82 billion, which surpassed the Zacks consensus by +3.23% and bettered the $4.48 billion reported in the year-ago quarter. Shares are trading down -1.6% on the news at this hour, adding to its -2% loss year to date. For more on CL’s earnings, click here.

Chevron Corporation (CVX): Free Stock Analysis Report

Exxon Mobil Corporation (XOM): Free Stock Analysis Report

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