Thursday, April 11th, 2024
This morning, the other inflation shoe drops. Following a wildly disappointing Consumer Price Index (CPI) report Wednesday morning (which mostly only came in 10 bps hotter across the board), this morning’s Producer Price Index (PPI) comes out with a mildly mixed series of data. Pre-market indices shrank their further sell-off levels to mixed, almost instantaneously with the release of March PPI figures: from -195 to -67 points on the Dow, -29 to -9 points on the S&P 500 and -76 to +4 points on the Nasdaq.
Headline PPI month over month reached +0.2%. This is 10 basis points (bps) below consensus expectations, and well off the previous month’s pace of +0.6%, which was the hottest single wholesale print, month over month, since June of 2022. Today’s +0.2% is the slimmest wholesale print since June of last year. Stripping out food and gas prices, +0.2% is also the core PPI read, month over month. Ex-food, energy and trade for March was cut in half from the previous month, from +0.4% to +0.2% this morning, the lowest print since November.
Year over year headline PPI is the only disappointment here. This rose half a percentage point, +1.6% to +2.1% in this latest read, which is the hottest we’ve seen since April. Lest we allow ourselves to believe this is all due to higher gas prices, core PPI year over year also skewed upward from the previous month, to +2.4% this morning from an upwardly revised +2.1% for February, and higher than the estimated +2.3%. Ex-food, energy and trade, this year-over-year figure moves to +2.7% from +2.8% a month ago.
That’s a lot of numbers bandying about. But keep in mind these are wholesale inflation numbers compared to the retail-oriented CPI. So the takeaway here is that input costs on PPI do not appear to be notably pushing retail prices higher. If they did, that would keep inflation “stickier” for longer; as it is, retail prices always have room to come down, and for the economy’s sake — as well as how the Fed deals with interest rates — let’s hope they do, sooner rather than later.
Elsewhere, this is also Jobless Claims day. Initial Jobless Claims this Thursday morning continue well-behaved, with 211K shedding 11K from the previous week’s upwardly revised 222K, and lower than the 217K expected. That previous 222K was the highest single-week print we’d seen since late January; 211K is the lowest read since the first week in March. Since December of 2021, we’ve kept new jobless claims historically low — at or around 215K per week.
Continuing Claims, reported a week in arrears from new claims, bumped up to 1.817 million in today’s release, above the 1.789 million from the previous week. Yet that had been the single-lowest week since holiday shopping-season distortions of mid-January. This 1.817 million figure for two weeks ago is the largest tally we’ve seen since the week of January 20th, but in reality, anything below 1.9 million — or even 2 million — is consistent with a healthy, if not robust, labor market.
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Pre-Markets Salved by Mixed PPI, Low Jobless Claims
Thursday, April 11th, 2024
This morning, the other inflation shoe drops. Following a wildly disappointing Consumer Price Index (CPI) report Wednesday morning (which mostly only came in 10 bps hotter across the board), this morning’s Producer Price Index (PPI) comes out with a mildly mixed series of data. Pre-market indices shrank their further sell-off levels to mixed, almost instantaneously with the release of March PPI figures: from -195 to -67 points on the Dow, -29 to -9 points on the S&P 500 and -76 to +4 points on the Nasdaq.
Headline PPI month over month reached +0.2%. This is 10 basis points (bps) below consensus expectations, and well off the previous month’s pace of +0.6%, which was the hottest single wholesale print, month over month, since June of 2022. Today’s +0.2% is the slimmest wholesale print since June of last year. Stripping out food and gas prices, +0.2% is also the core PPI read, month over month. Ex-food, energy and trade for March was cut in half from the previous month, from +0.4% to +0.2% this morning, the lowest print since November.
Year over year headline PPI is the only disappointment here. This rose half a percentage point, +1.6% to +2.1% in this latest read, which is the hottest we’ve seen since April. Lest we allow ourselves to believe this is all due to higher gas prices, core PPI year over year also skewed upward from the previous month, to +2.4% this morning from an upwardly revised +2.1% for February, and higher than the estimated +2.3%. Ex-food, energy and trade, this year-over-year figure moves to +2.7% from +2.8% a month ago.
That’s a lot of numbers bandying about. But keep in mind these are wholesale inflation numbers compared to the retail-oriented CPI. So the takeaway here is that input costs on PPI do not appear to be notably pushing retail prices higher. If they did, that would keep inflation “stickier” for longer; as it is, retail prices always have room to come down, and for the economy’s sake — as well as how the Fed deals with interest rates — let’s hope they do, sooner rather than later.
Elsewhere, this is also Jobless Claims day. Initial Jobless Claims this Thursday morning continue well-behaved, with 211K shedding 11K from the previous week’s upwardly revised 222K, and lower than the 217K expected. That previous 222K was the highest single-week print we’d seen since late January; 211K is the lowest read since the first week in March. Since December of 2021, we’ve kept new jobless claims historically low — at or around 215K per week.
Continuing Claims, reported a week in arrears from new claims, bumped up to 1.817 million in today’s release, above the 1.789 million from the previous week. Yet that had been the single-lowest week since holiday shopping-season distortions of mid-January. This 1.817 million figure for two weeks ago is the largest tally we’ve seen since the week of January 20th, but in reality, anything below 1.9 million — or even 2 million — is consistent with a healthy, if not robust, labor market.
Questions or comments about this article and/or author? Click here>>