March PPI rose .7% m/o/m, below expectations of a rise of 1% but the core saw a .3% rise m/o/m, above the forecast of .2%. This brings the y/o/y headline gain to 5.8% and the core rate to 1.9% (highest since Aug ’09). While energy prices rose 2.6%, food prices fell by .2%. Gasoline prices rose by 5.7%. Helping to boost the core rate was a .9% gain in the wholesale price of passenger cars and a .7% rise in truck prices. Inflation in the pipeline remained robust as intermediate goods prices rose 8.9% y/o/y and crude goods prices rose 16.4% y/o/y. While inflation pressures are clearly evident in today’s figure, the market will more focus on tomorrow’s consumer price report to see what’s been passed through.
Initial Jobless Claims disappointed as it rose by 412k, 32k higher than expected and up from 385k last week. It’s the 1st reading above 400k since early March and it takes the 4 week average to 396k from 390k. Continuing Claims were 25k below estimates but the prior week was revised up by 15k. Extended Benefits rose by 40k. Bottom line, while the labor market is improving, the pace remains lumpy and sustainable traction remains difficult to achieve. With this said, its worth speculating that the persistent rise in energy prices, among other commodity prices and the fallout from the Japanese earthquake both are impacting the psyche of the average CEO, regardless of business size and may be impacting the appetite to expand until these factors get some clarity on its lifespan.