US January PPI 6.0% y/y vs 5.4% expected and US initial jobless claims 194K versus 200K estimate

[retiefff]

• Prior PPI 6.2% y/y
• m/m PPI +0.7% vs +0.4% expected (-0.4% prior)
• PPI ex food and energy +5.4% y/y vs 4.9% expected (5.5% prior)
• PPI ex food and energy +0.5% m/m vs +0.3% expected (+0.1% prior)

This is a hot number and will add to the worries about sticky inflation. We hear from a few Fed officials today including hawks Mester and Bullard. It's their chance to shine.

• Initial jobless claims 194K versus 200 K estimate. Prior month revised to 195K vs 196K last week
• 4 week moving average of initial dollars claims 189.5K versus 189.00K last month
• Continuing claims 1.696M versus 1.695M estimate. Prior week was revised to 1.680M from 1.688M previously reported
• 4 week MA of continuing claims 1.673M vs 1.663M last week
• The largest increases in initial claims for the week ending February 4 were in California (+6,820), Ohio (+3,528), Illinois (+1,533), Kansas (+611), and Florida (+568),
• The largest decreases were in Georgia (-1,463), New Jersey (-1,291), Texas (-859), Oregon (-692), and Arkansas (-632).

Employment data remains solid. These numbers don't change that perception.

https://www.forexlive.com/news/us-january-ppi-60-yy-vs-54-expected-20230216/

https://www.forexlive.com/news/us-initial-jobless-claims-194k-versus-200k-estimate-20230216/

 

[jmz]

@retiefff Looks like this is largely the price of gas:

Product detail: Nearly one-third of the January rise in the index for final demand goods can be traced
to prices for gasoline, which increased 6.2 percent. The indexes for residential natural gas, diesel
fuel, jet fuel, soft drinks, and motor vehicles also moved higher. Conversely, prices for fresh and dry
vegetables decreased 33.5 percent. The indexes for residual fuels and for basic organic chemicals
also declined. (See table 2.)

There are some interesting contrasting numbers as well:

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate
demand fell 5.0 percent in January following a 1.5-percent rise in December. An 8.5-percent decline
in prices for unprocessed energy materials accounted for 70 percent of the January decrease. The
index for unprocessed foodstuffs and feedstuffs moved down 4.7 percent

Overall not a great PPI report. I don't think it's enough to push the Fed to a half basis point increase instead of a quarter. Fuel drove up the top-line number for both the CPI and the PPI, and since that's considered a volatile indicator, it's unlikely to change the Fed's strategy.

https://www.bls.gov/news.release/ppi.nr0.htm

 

[nicolalalala]

@jmz

The indexes for residential natural gas

Ironic considering the crash in natural gas futures. Utility and power demand is priced using contracts done months in advance. Inflation readings are inherently backward looking and neither CPI or PPI have reflected the recent drop in cost of power.

 

[jmz]

@nicolalalala It's reflected in the unprocessed goods number, but yes it's going to be a lagging indicator.

 

[shefa]

@nicolalalala Does anyone know why natural gas futures suddenly took a nose dive?

 

[sikhajain]

@shefa It’s been a more mild winter so less demand than initially expected.

 

[joyce65714]

@sikhajain The US also has record gas production and it's projected to go up even more.

 

[jowabe]

@shefa I've been going to Taco Bell a lot recently

 

[rozmac]

@jmz What was the number ex energy and food?

 

[colton18]

@rozmac Pretty shit also.

 

[kylespringer]

@jmz I don’t think they would increase from .25. If they did, it has the potential of crashing the market. But who knows at this point nothing shocks me.

 

[edington749]

@kylespringer I don’t think they care about the stock market though. That doesn’t represent the economy and it’s not their responsibility. Their only focus is really balancing a healthy inflation and employment % by raising/lowering interest rates.

 

[jmz]

@kylespringer It wouldn't crash the market but the markets would not like it at all.

 

[sherryjas437]

@kylespringer There is an 1-24 month lag from raising rates. They will continue with 25 bips until they start seeing the effects of the hikes.

 

[colton18]

@retiefff Is this disinflationary?

 

[retiefff]

@colton18 Yes /s

 

[lovelife34]

@colton18 it disinflates disinflation

 

[tabbytru]

@lovelife34 So like, sucking on a balloon from the inside of the balloon?

…I think my heads gonna explode…

 

[dealonpill]

@colton18 Disinflation is the new transitory

 

[revman2222]

@colton18 Transitory dedisinflationary inflation.