How it can affect the markets?
The PCE price index is a measure of the cost that people pay to live in the United States, pay for goods and services. The PCE price index is known for capturing the US inflation or deflation, and it is the preferred US FED measure to monitor the real inflation and base its monetary policy on that. Also, these numbers, with a wide range of consumer expenses and reflecting, show the changes in consumer behavior.
The personal consumption expenditure price index increased by 0.3 percent from a month earlier in September, lifted with the higher cost of both goods and services. Nondurable goods inflation picked up to 0.6 percent from 0.4 percent in the previous month, and durable goods prices increased by 0.3 percent. The Core PCE price index, which is excluding food and energy, rose by 0.2 percent in September, as the market was expecting. (US Bureau of Economic Analysis)
On the income front, it was declined in September by 0.1%, which is mostly because of an expired stimulus. Enhanced unemployment benefits ended on September 6. On the other hand, as we had the increasing average earning hours in the NFP data, for October we are waiting to see overall income rose 0.2% in October.
And about spending, we can see the bigger numbers, but mostly due to increasing prices and not necessarily because of higher spending. Personal spending rose 0.6% in September, however with a price adjustment, the real monthly spending growth was about 0.3%. As retail sales increased by 1.7% in October, it can also increase the spending level, because many people are ready to go out and buy their Holiday goods ahead of the New Year even, as supply shortage putting them in hurry.
Better than expected numbers mean that economy is growing fast enough, and we have to watch the inflation much closer than before. Therefore, higher numbers mean that tightening policy is more likely in the next FED meeting and, it is not in favor of US stock markets.
