Gas Prices Rise, Core Prices Held in Check: April 8 – 12

Prices rose at the gas pump in March but moderated elsewhere. Here are the five things we learned from U.S. economic data released during the week ending April 12.

#1Headline consumer prices rose in March, core prices not so much. The Consumer Price Index (CPI) jumped 0.4 percent on a seasonally adjusted basis, per the Bureau of Labor Statistics. This was the biggest single-month increase for CPI in 14 months, leaving the measure up 1.9 percent over the past year. Energy CPI surged 3.5 percent as gasoline prices swelled 6.5 percent. Food prices gained 0.3 percent, including a 0.4 percent bounce in the price of food at home. Net of energy and food, core CPI inched up a modest 0.1 percent and has risen 2.0 percent over the past year. Prices increased during March for shelter (+0.4 percent), new vehicles (+0.4 percent), and medical care services (+0.3 percent). Falling were prices for apparel (-1.9 percent) and used cars/trucks (-0.4 percent).

#2Wholesale prices also jumped in March. The Bureau of Labor Statistics indicates that final demand Producer Price Index (PPI) grew a seasonally adjusted 0.6 percent, its largest one-month increase since last October. Core final demand PPI, which removes the impact of energy, food, and trade services, was unchanged, however. Sixty percent of the rise in headline PPI was because of the 16.0 percent surge in wholesale gasoline prices. Final demand energy PPI rose 5.6 percent while that for foods grew a far more modest 0.3 percent. Trade services PPI—measuring retailer and wholesaler margins—jumped 1.1 percent for its biggest gain since last October. Over the past year, headline final demand PPI has risen 2.2 percent while the 12-month comparable for the core measure was +2.0 percent. 

#3The number of job openings contracted (yet remained near record highs) in February. The Bureau of Labor Statistics reports there were a seasonally adjusted 7.087 million nonfarm job openings on the final day of February, down 538,000 from January but still 8.5 percent ahead of the February 2018 count. Among the industries showing the most substantial year-to-year percentage increases in job opening were construction (+44.4 percent), professional/business services (+24.9 percent), manufacturing (+9.4 percent), and health care/social assistance (+8.5 percent). Hiring also pulled back slightly, dropping by 133,000 to 5.696 million (up 1.8 percent versus February 2018). Industries with the most significant 12-month percentage gains in hires were transportation/warehousing (+8.9 percent), wholesale trade (+7.5 percent), retail (+6.8 percent), and health care/social assistance (+5.7 percent). 5.556 million people left their jobs in February, essentially matching the 5.532 million that had done so in January and up 5.4 percent from a year earlier. Versus the previous year, the number of people who quit their job rose 9.6 percent to 3.480 million while the count of workers laid off was off 1.2 percent to 1.742 million

#4New factory orders fell for the fourth time in five months in February. The Census Bureau estimates new orders for manufactured goods declined 0.5 percent during the month to a seasonally adjusted $497.5 billion. Durable goods orders slumped 1.6 percent while those for nondurable goods gained 0.6 percent. New orders net of transportation goods increased 0.3 percent while those of civilian non-aircraft capital goods (a proxy for business investment) slipped 0.1 percent. Shipments grew for the first time in five months with a 0.4 percent gain to $505.5 billion, with increases of 0.2 percent and 0.6 percent for durable and nondurable goods, respectively. The value of unfilled orders fell for the fourth time in five months, off 0.3 percent to $1.178 trillion while inventories widened for the 27th time in 28 months (up 0.3 percent to $687.8 billion).

#5Small business owner sentiment held steady in March. The Small Business Optimism Index, from the National Federation of Independent Business, eked out a 1/10th of a point increase during the month to a seasonally adjusted reading of 101.8 (1986=100). While 2.9 points below its March 2018 reading, the index has been above a reading of 100.0 for 27 consecutive months. Four of the index’s ten components improved from their February readings (led by measures tracking both current job openings and plans to increase employment) while three declined in March (including a four-point drop for current inventories). The press release said the measures indicate the U.S. economy will enjoy “solid growth… with no signs of a recession in the near term.”

Other U.S. economic data released over the past week:
Jobless Claims (week ending April 6, 2019, First-Time Claims, seasonally adjusted): 196,000 (-8,000 vs. previous week; -31,000 vs. the same week a year earlier; fewest since October 4, 1969). 4-week moving average: 207,000 (-7.6% vs. the same week a year earlier).
Import Prices (March 2019, All Imports, not seasonally adjusted): +0.6% vs. February 2019, Unchanged vs. March 2018. Nonfuel Imports: -0.2% vs. February 2019, -0.8% vs. March 2018.
Export Prices (March 2019, All Exports, not seasonally adjusted):  +0.7% vs. February 2019, -2.3% vs. March 2018. Nonagricultural Exports: +0.7% vs. February 2019, +1.0% vs. March 2018.
Monthly Treasury Statement (March 2019, Budget Deficit): First Six Months of FY2019: -$691.2 trillion (vs. First Six Months of FY2018: $599.7 billion).
FOMC Minutes

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

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