Thursday, September 10, 2020
Thursday morning brings us new economic data, most reliably new jobless claims reports. What we see on Initial Jobless Claims for last week is something you almost never get: an exact number from the previous week: 884K new claims matches the upwardly-revised 884K from two weeks ago. This is a disappointment compared to the 840K analysts were looking for in the new number, though it is still the third weekly read below 1 million new claims in the past six weeks.
Continuing Claims also came in higher than expected, to 13.385 million from the slight upward revision to the previous week to 13.29 million. Though these figures are starting to appear stagnant, we haven’t seen a Continuing Claims headline above 15 million since August 2nd. That said, more than 13 million longer-term unemployment claims is not the place we want to plateau.
Weekly claims has a similar problem: though the past two weeks have established new claims below 900K per week, over the past six weeks we’re still averaging more than a million claims. Consider that much of the low-hanging fruit — those temporarily laid off from Construction and Hotel jobs being brought back to work — has already been picked, and we see a strained labor market ahead of us.
The longer we go without a relief package from Congress to account for the well-being of these Americans making jobless claims, the more problems we are likely to see in the economy: credit defaults, evictions and the like. And we won’t be running our economy at our pre-pandemic levels until the coronavirus is successfully dealt with, which looks like will still take a while.
A new Producer Price Index (PPI) report has also been released this morning, with results for August better-than-expected across the board. A headline of +0.3% topped estimates by 10 basis points, though down from July’s +0.6%. Stripping out volatile food and energy pricing, that number bumps up to +0.4%, double the expected number. Ex-food & energy and trade, +0.3% is the figure, also slightly better than expected.
Year over year PPI, ex-food & energy, comes in at +0.6%, though unadjusted final demand came in at -0.2% from a year ago August. Ex-food, energy and trade, +0.3% is the year-over-year number. Some price firming noted in these numbers from last month is certainly welcome; we shall see if these stronger results continue as our aforementioned economic challenges persist in the coming months.
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