US personal income growth falls short of forecasts in June

Americans continued spending at a steady clip in June, dipping into their savings again as income growth fell short of expectations.

However, according to economists much of the weakness was driven by the most volatile categories of income.

Personal incomes were unchanged on the month, while personal consumption expenditures rose by 0.1%, according to the Department of Commerce.

Economists had forecast increases of 0.4% and 0.1%, respectively.

In parallel, once adjusted for inflation disposable incomes dipped by 0.1% versus May, albeit after rising by 0.5% in the previous month.

Meanwhile, the personal saving rate slipped from 3.9% for May to 3.8% in June.

"Most of the weakness in personal income was driven by the personal income receipts on assets category, which fell 1.7% m/m – both interest and dividend income fell sharply in June after having reported strong rises the previous month. We are inclined to look through this volatility as just noise in the data and take signal from the solid print in wages and salaries," said Blerina Uruci at Barclays Research.

Wages and salaries grew by $30.8bn in June, according to the Department of Commerce.

The PCE price deflator - the inflation gauge most closely watched by the US central bank - drifted lower from 1.5% to 1.4% (consensus: 1.3%), but at the core level it was steady at 1.5% (consensus: 1.4%).

Tuesday's data came alongside revisions figures on personal outlays, incomes and savings from 2014 to 2016.

Spending in 2015 was revised higher by $60.9bn or 0.5 percentage points for 2016, while the savings rate for 2015 was marked up by 0.3 points to 6.1% and that for 2016 down by 0.8 points to 4.9%.