Pre-market futures are down this morning following new economic data hitting the tape. The Dow continues to roll back recent gains, -46 points at this hour, while the S&P 500 and Nasdaq — the latter of which closed at a new all-time high again yesterday — are down -17 and -133 points, respectively.
Wholesale PPI Headlines Spike Hotter
After yesterday’s Consumer Price Index (CPI) report on retail inflation, this morning we see the Producer Price Index (PPI) numbers for November, the wholesale side of the inflation equation. Headline month over month came in double expectations to +0.4%, the highest since June of this year.
Year over year PPI on headline ballooned back up to +2.98% from an upwardly revised +2.63% in October and nearly 3x higher than where we were back in January: +1.05%. This figure is the highest we’ve seen since February of 2023, when we were headed very much in the opposite direction.
Core month over month PPI came in as expected — +0.2% — so we can clearly see the inflationary pain was caused on the food and energy side. And because we already know oil prices have been trading on the lower end of their near-term range, we see food prices being the culprit here. In fact, Finished Consumer Foods last month notched a +31% leap, far higher than any other metric in this report.
Core year over year PPI reached +3.4% — 10 basis points (bps) lower than last month’s read but still hotter than the October revision. Ex-food, energy and trade month over month slimmed down to +0.1%, +3.5% year over year. These are more in-line prints with expectations; in fact, that +0.1% is cooler than the +0.2% anticipated. To get a lower figure, you’d have to go back to May of 2023.
For some reason, food prices are pushing PPI numbers higher. To the extent PPI findings work their way into future CPI, this may make some investors nervous that inflation has not yet been tamed. That said, this might also be a simple blip on the screen; most other metrics in this report were well behaved in terms of cooling inflation.
Jobless Claims Higher on Both New and Longer-Term
Thursday morning almost always brings new Weekly Jobless Claims data, and today is no exception. Initial Claims jumped much higher than expected, to 242K from an unrevised 224K the previous month. This is the highest read we’ve seen since mid-October; since then it had appeared jobless claims had come back down to trailing 6-month averages.
Continuing Claims also notched higher, to 1.886 million from an unrevised 1.87 million the previous week. The good news here is these figures are down from the 1.9+ million prints we’d begun to experience over the previous couple weeks.
Overall, jobless claims do align with our overall understanding of a cooling labor market. This cooling has been historically pretty gradual, and of course we’d like to see this continue, as would the Fed. And just like the spike in monthly food prices in today’s PPI report, we expect the Fed will look through the temporary glitches to an overall trajectory of the “soft landing” of the economy, which remains intact (for now).
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