US stock market daily report (June 25, 2015, Thursday)

The U.S. Commerce Department reported on Thursday that during May, U.S. consumer spending increased by 0.9% for the biggest gain since August 2009. Consumer spending during April was upwardly revised by 0.1% from unchanged.

Further evidence that economic growth was gathering momentum during Q2 2015 is attributed to the largest increase in consumer spending in nearly six years, due to a strong demand for automobiles and other big-ticket items such as major appliances. During May, spending on long-lasting goods such as automobiles jumped 2.2% and outlays on services like utilities rose 0.3%.

Inflation pressures remains tame despite acceleration in consumer spending. Personal Consumption Expenditures (PCE) price index rose 0.2% in the 12 months through May 2015. Excluding food and energy, prices edged up 0.1%. Core PCE price index rose 1.2% during the 12 months through May, striking the smallest gain since February 2014.

During May, consumer spending increased by 0.6%, hitting the largest gain since August 2014. Boosted by a tightening labor market which is starting to strengthen wage growth, personal income increased by 0.5% during May.

The report from May implies that consumers are spending some of the money left over from lower gasoline prices.
Economic data during May remains bullish, from job growth to the housing market.

Manufacturing is starting to stabilize after struggling from lingering effects of the strength of the dollar along with lower energy prices.

Consumer spending accounts for more than two-thirds of U.S. economic activity.

U.S. Labor Department reported initial jobless claims for state unemployment benefits rose 3,000 to a seasonally adjusted 271,000 for the week ended June 20. A threshold usually associated with a firming labor market is the 16th consecutive week that jobless claims held below 300,000. The four-week moving average of claims fell 3,250 to 273,750 last week.

With the unemployment rate not too far from the 5.0% to 5.2% range that most Fed officials consider consistent with full employment, the labor market is tightening. A strengthening jobs market could be bolstering confidence in the economy, encouraging households to tap into savings.

Contributed by Millennium Traders