NBC Economics and Strategy reports that U.S. nominal personal income increased by 0.4% in July, doubling the median economist forecast of 0.2% and outpacing the previous month's 0.2% gain [1]. Nominal personal spending also rose by 0.2% in July, primarily driven by a 0.6% increase in the services sector [1]. After adjusting for inflation, real disposable income climbed 0.4%, while real spending remained flat [1].
On the inflation front, the headline Personal Consumption Expenditures (PCE) deflator for July remained steady at 3.7% year-over-year, unchanged from June and slightly above consensus expectations of 3.6% [1]. The core PCE measure also held at 3.3%, matching consensus estimates. On a monthly basis, both the headline and core (excluding food and energy) PCE indices increased by 0.2% [1].
Looking ahead, NBC Economics and Strategy anticipates that the August nonfarm payrolls report will show an increase of approximately 80,000 jobs, with the unemployment rate remaining at 4.1% as labor force participation is expected to edge up by 0.1 percentage points to 61.5% [1]. This forecast is based on positive weekly data from ADP and other soft employment indicators, such as S&P Global's flash composite PMI, as well as persistently low initial jobless claims, suggesting limited layoffs [1].
The report notes that the upcoming nonfarm payroll figures are likely to attract significant market attention, given the recent trends in income, spending, and inflation data [1].
CONCLUSION
U.S. economic data for July showed stronger-than-expected personal income growth and steady inflation, while August payrolls are projected to rise modestly with stable unemployment. These developments suggest a resilient labor market and persistent inflation pressures, which are likely to be closely watched by market participants.