- Joined
- Mar 3, 2021
(Bloomberg) -- Key measures of US inflation and labor costs cooled significantly in recent months, adding to growing optimism that the economy may be able to avoid a recession.
The employment cost index, a broad gauge of wages and benefits, increased 1% in the second quarter, marking the slowest advance since 2021, according to Bureau of Labor Statistics figures released Friday.
A separate report showed the Fed’s preferred inflation gauge, the personal consumption expenditures price index, rose 3% from a year earlier in June, the smallest increase in more than two years. Core prices — which exclude food and energy and are regarded as a more reliable signal of underlying inflation — advanced by a less-than-expected 4.1%, also the least since 2021.
The PCE report also indicated consumer spending, adjusted for inflation, rose in June by the most since the start of the year, bolstering the message from data on Thursday that showed the US economy expanded at a solid pace in the second quarter.
Taken together, the figures add to hopes that the Federal Reserve can achieve a so-called soft landing: moderating inflation without big job losses, despite the steepest interest-rate hikes in a generation.
The S&P 500 opened higher and Treasury yields remained lower.
The employment cost index, a broad gauge of wages and benefits, increased 1% in the second quarter, marking the slowest advance since 2021, according to Bureau of Labor Statistics figures released Friday.
A separate report showed the Fed’s preferred inflation gauge, the personal consumption expenditures price index, rose 3% from a year earlier in June, the smallest increase in more than two years. Core prices — which exclude food and energy and are regarded as a more reliable signal of underlying inflation — advanced by a less-than-expected 4.1%, also the least since 2021.
The PCE report also indicated consumer spending, adjusted for inflation, rose in June by the most since the start of the year, bolstering the message from data on Thursday that showed the US economy expanded at a solid pace in the second quarter.
Taken together, the figures add to hopes that the Federal Reserve can achieve a so-called soft landing: moderating inflation without big job losses, despite the steepest interest-rate hikes in a generation.
The S&P 500 opened higher and Treasury yields remained lower.