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The second estimate of 2017 Q2 GDP was revised upward to a 3.0% annual rate from its initial 2.6% estimate. The revision was based on increased estimates for personal consumption expenditure (+3.3%) and nonresidential fixed investments (+0.6%), which were partially offset by larger decreases in state and local government spending (-1.7%). Consumer spending was up for automobiles, clothing and footwear, and housing, but dropped for health care, recreation services, and restaurants. Annual corporate pre-tax profits increased +$26.8B for Q2 after a -$46.2B decrease in Q1.
Personal income rose +0.4% in July after a flat June, and the savings rate fell by -0.1% to 3.5%, providing the cash to push July’s Personal Consumption Expenditure (PCE) spending up to +0.3% following an upwardly revised +0.2% for June. Food services and accommodations were the largest components in a +0.2% increase in service spending , and furnishings, durable household equipment and automotives contributed to a +0.6% increase in spending on goods. The core PCE price index, which excludes food and energy and is the Federal Reserve’s preferred measure of inflation, only increased +0.1% for the month, dropping the yearly rate by -0.1% to +1.4%, well below the Fed’s 2% target rate.
The unemployment rate  ticked up +0.1% to 4.4% as a less than expected 156,000 jobs were added in August, and previous month’s new jobs figures were revised downward, with July down -20,000 jobs to 189,000 and June down -21,000 to 210,000, bringing the average number of new jobs over the last 3 months to 185,000. Jobs were added in manufacturing (+36,000), construction (+28,000), professional and technical services (+22,000), healthcare (+20,000) and mining (+7,000), with other employment sectors showing little change. The average workweek dropped -0.1 hours to 34.4 hours, and average hourly earnings were up +0.1% for the month and +2.5% for the year.
Upcoming Economic Reports:
Tuesday September 5 – Factory Orders
Wednesday September 6 – International Trade