Wall Street Strategies
Hello! Sign in or Register


Econ Wrap-Up: PPI, Weekly Jobless Claims

5/14/2015
By Jennifer Coombs

Weekly initial jobless claims are the bright point for the week and are signaling very healthy conditions in the labor market. For the week ended May 9th, initial jobless claims fell by 1,000 to a level of 264,000 which was actually lower than the lowest economist estimate. This marks the third consecutive week where initial claims have been below 260,000 and this marks a 15-year low and one of the best runs for initial claims on record. The best part is there are no seasonal or holiday impacts that are skewing the numbers to the downside. This puts the 4-week rolling average down even further by a steep 7,750 to a level of 271,750. This is more than 10,000 below the trend from this time a month ago and implies that May’s employment numbers may actually be much better than expected. Continuing claims, which lag by a week, were unchanged relative to the week of May 2nd at a 15-year low of 2.229 million. The 4-week average for continuing claims is down 12,000 to a reading of 2.260 million, which is another 15-year low for the reading. These numbers are quite interesting and are quite the contrast relative to the recent reports on the jobs market. However, one thing is quite clear: employers may not be hiring at a brisk rate, but they are definitely holding onto their current employees.

 

 

Additionally, despite the recent lift in oil prices, inflation levels remain relatively dormant. The April headline reading of the producer price index (PPI) fell by 0.4% for the month which was below the lowest consensus estimate of -0.1%. When food and energy prices are excluded, the index fell 0.2% which is still below the lowest estimate for no change during the month. Excluding food, energy, and trade services, the PPI inched about 0.1% higher, yet even that is still below the Street’s lowest estimate. On a year-over-year basis, the reading is at a record low of about -1.3%. Despite the recent rise in oil prices, final demand for energy in April declined by a steep 2.9% with the year-over-year rate at -24.0%. Gasoline prices fell by 4.7% in the month while food demand extended its decline further dropping by 0.9% for a year-over-year rate of -4.2%. Although final demand for services was down 0.1% for the month, it’s one of the few readings in the positive column for the year at +0.9%. All readings are still well below the Fed’s general target rate for inflation at +2.0%. Like yesterday’s report on import and export prices, today’s PPI reading is another big tick-mark in support of the Fed doves. The hawks have been warning that the reverse in energy prices will lead to an increase in inflation, but so far, these pricing reports have demonstrated that this is not the case.

 

Jennifer Coombs
Wall Street Strategies

More Articles by Jennifer Coombs


 

Add a Comment!

Name:
Email:
Comment:
 
 
Submitted comments are subject to moderation before posting.


Home | Products & Services | Education | In The Media | Help | About Us |
Disclaimer | Privacy Policy | Terms of Use |
All Rights Reserved.