Today’s Producer Price Index (PPI) report for April is out before today’s opening bell, with numbers at or below expectations across the board. Headline month-over-month PPI — following yesterday’s Consumer Price Index (CPI) (which came down less than expected overall) — reached +0.2%, 10 basis points (bps) below estimates but a big upswing from the upwardly revised -0.4% a month ago. Core PPI — stripping out foods and energy costs — was also +0.2% for the month, in-line with analysts’ expectations. The high marks on both of these were +1.6% and +1.2%, respectively, in March of last year.
Year-over-year PPI is now down 11 months in a row to +2.3% from +2.7% reported a month ago. This is the nearest any inflation metrics have gotten to the Fed’s optimal inflation gauge of +2% since the Great Reopening got underway. It also shows a drastic reduction from the March ’22 high +11.7%, which went back to the early ’80’s for a comparable statistic. Core PPI year over year is now down 14 months straight to +3.2%, below the +3.6% expected and the high-water mark of 9.7%.
Excluding food, energy and transportation, we’re at +0.2% month over month once again, +3.4% year over year. So we can see a bit of stickiness on inflation prints once we get the more volatile statistics out of the way, but they’re still well off cycle highs. In fact, aside from a couple “unched” months, this ex-food, energy and transportation print has moved lower for the past 14 months straight.
This being Thursday morning, we also see new Initial Jobless Claims numbers out, and these have taken a big step higher: 264K was well above the 245K expected and unrevised 242K — easily the highest print of the 12-week cycle (not of which previously had even broken 250K) and the largest amount of new jobless claims since October of 2021. Because it’s such a big jump, we’ll wait a week or two before determining whether this print is simply an outlier.
Continuing Claims were up month over month, but not nearly as much: 1.813 million was in-line with last week’s primary read, which has now been revised down to 1.801 million. We’ve also seen a bit of a jump from the 1.6 million area earlier during the Great Reopening, but 1.8 million is certainly no reason to fear a labor market crisis. Then again, longer-term claims report a week behind new claims, so it’s possible we’ll have higher numbers in the coming weeks.
Elsewhere, PacWest ( is selling off in today’s pre-market on a new regulatory filing where the West Coast regional bank lost 9 1/2% of its deposits last week, the most of which came over the two-day period of May 4th and 5th. PacWest has asserted that the bank still has $5.2 billion in deposits and its 12-month cash flow needs are reportedly being met. But the stock, already down more than -75% year to date, had been down as much as -29% in early trading.
On the one hand, the credit contraction we’re already seeing in the regional banks as another West Coast member looks less-than-wholly-stable is doing a bit of the Fed’s job for them, in that these reactions to the banking industry are anti-inflationary. But on the other, it’s a bit of the drip-drip-drip in an industry where analysts were mindful something might “break.” We’re not saying all banks are breaking, and we’re not even saying PacWest is going bankrupt. But what’s clear is this regional contagion is not completely contained.
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PPI Increased Moderately in April
Today’s Producer Price Index (PPI) report for April is out before today’s opening bell, with numbers at or below expectations across the board. Headline month-over-month PPI — following yesterday’s Consumer Price Index (CPI) (which came down less than expected overall) — reached +0.2%, 10 basis points (bps) below estimates but a big upswing from the upwardly revised -0.4% a month ago. Core PPI — stripping out foods and energy costs — was also +0.2% for the month, in-line with analysts’ expectations. The high marks on both of these were +1.6% and +1.2%, respectively, in March of last year.
Year-over-year PPI is now down 11 months in a row to +2.3% from +2.7% reported a month ago. This is the nearest any inflation metrics have gotten to the Fed’s optimal inflation gauge of +2% since the Great Reopening got underway. It also shows a drastic reduction from the March ’22 high +11.7%, which went back to the early ’80’s for a comparable statistic. Core PPI year over year is now down 14 months straight to +3.2%, below the +3.6% expected and the high-water mark of 9.7%.
Excluding food, energy and transportation, we’re at +0.2% month over month once again, +3.4% year over year. So we can see a bit of stickiness on inflation prints once we get the more volatile statistics out of the way, but they’re still well off cycle highs. In fact, aside from a couple “unched” months, this ex-food, energy and transportation print has moved lower for the past 14 months straight.
This being Thursday morning, we also see new Initial Jobless Claims numbers out, and these have taken a big step higher: 264K was well above the 245K expected and unrevised 242K — easily the highest print of the 12-week cycle (not of which previously had even broken 250K) and the largest amount of new jobless claims since October of 2021. Because it’s such a big jump, we’ll wait a week or two before determining whether this print is simply an outlier.
Continuing Claims were up month over month, but not nearly as much: 1.813 million was in-line with last week’s primary read, which has now been revised down to 1.801 million. We’ve also seen a bit of a jump from the 1.6 million area earlier during the Great Reopening, but 1.8 million is certainly no reason to fear a labor market crisis. Then again, longer-term claims report a week behind new claims, so it’s possible we’ll have higher numbers in the coming weeks.
Elsewhere, PacWest ( is selling off in today’s pre-market on a new regulatory filing where the West Coast regional bank lost 9 1/2% of its deposits last week, the most of which came over the two-day period of May 4th and 5th. PacWest has asserted that the bank still has $5.2 billion in deposits and its 12-month cash flow needs are reportedly being met. But the stock, already down more than -75% year to date, had been down as much as -29% in early trading.
On the one hand, the credit contraction we’re already seeing in the regional banks as another West Coast member looks less-than-wholly-stable is doing a bit of the Fed’s job for them, in that these reactions to the banking industry are anti-inflationary. But on the other, it’s a bit of the drip-drip-drip in an industry where analysts were mindful something might “break.” We’re not saying all banks are breaking, and we’re not even saying PacWest is going bankrupt. But what’s clear is this regional contagion is not completely contained.