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CPI Came in Unchanged in September

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A new read on September Consumer Price Index (CPI) came in unchanged on the month, down a tick from the +0.1% expected and the unrevised +0.1% from August. Stripping out volatile food and energy costs (the “core” read) came in at +0.1%, down from the expected +0.2% and lower than the unchanged +0.3% read the previous month.

Year over year, we see +1.7% on the headline, and +2.4% on “core.” July 2018 brought us our most recent high peak at 2.9% on headline, while April 2015 brought us a CPI headline of -0.2% — the lowest since climbing out of the Great Recession last decade. This morning’s core read demonstrates at least a near-term slowdown from the +0.3% prints we’d seen the previous three months.

Real Average Weekly Earnings came in at +0.9% for September, down a tad from the +1.1% in this same report a month ago. Hourly Earnings reached +1.2%, just smidge lower than the +1.4% we saw for August. For September, vehicle prices fell while recreation spending rose. Gasoline prices dipped for the second straight month.

None of this data sets off any alarm bells at all; we are all in growth territory, though perhaps not as robustly as many were hoping for. Then again, analysts do not want to see CPI reads spin too far up month over month, which would indicate a spike in inflation. However, with plenty of headwinds — including the ongoing trade war and other uncertainties in the overall global economy — higher inflation is currently on no one’s radar.

In any case, today’s CPI figures were an improvement on Tuesday’s Producer Price Index (PPI) numbers, which showed September post a -0.3% headline, while year-over-year core barely got to +2.0%. This 2% number is significant for both PPI and CPI reads, in that they are where the Fed looks to see economic growth at desired “Goldilocks” levels, at least in our current environment.

 

Initial Jobless Claims fell by 10K week over week to 210K — smack dab within the healthy labor market range of 200-225K, which we have enjoyed with few exceptions for more than 100 weeks. Continuing Claims rose a bit from 1.655 million last reported (a week in arrears from initial claims data) to 1.684 million this morning. Anything under 1.75 million is consistent with the initial claims range, meaning all of these weekly jobless numbers remain as strong as can be expected.

Pre-market futures are currently still in the red a half-hour before the opening bell, but have crept up notably since this economic data has been released. Should this momentum continue, we look for green numbers in the major U.S. indexes before long — depending on news headlines from U.S.-China trade talks, Turkish aggression in Syria and numerous domestic issues.