Economic Data: Initial Claims, PPI, Inflation

Initial Claims above 400k for 5th straight week

For a 5th straight week Initial Jobless Claims printed above expectations, this week totaling 434k vs the estimate of 430k and last week was revised up by 4k to 478k. The 4 week average is now 437k vs 432k last week and its the most since Nov. While the Labor Dept said Alabama saw a jump in the filing for claims because of the tornados, they said it didn’t have much of an impact on the national figure. Continuing Claims were 56k higher than expected and were up 74k from last week. Extended Benefits fell by 43k. Bottom line, Initial Claims are now above 400k for a 5th straight week and points again to a recovery that is still lackluster.

Inflation took bite out of retail sales

April Retail Sales ex auto’s and gasoline rose just .2%, below expectations of up .5%. It’s still up 5.2% y/o/y and sales just ex gasoline was also up .2%. The volatile category of building materials rose .1%. Dept stores, restaurants/bars, sporting goods, health/personal care, furniture and electronics saw sales declines but rose in clothing, food/beverages, motor vehicles/parts, and online retailers. Bottom line, inflation took a bite out of April sales as gasoline station sales rose 2.7% m/o/m and 21.5% y/o/y.

PPI above expectations

Headline PPI rose .8%, .2% above expectations and the core rate rose .3% for a 2nd straight month, .1% higher than estimated. This brings the y/o/y gain to 6.8%, the highest since Sept ’08 and the core rate is now up 2.1% y/o/y, the most since Aug ’09. The headline gain was mostly led by energy which saw prices up 2.5% m/o/m while food was up .3%. Helping to boost the core rate was a .5% rise in passenger car prices and .6% gain in truck prices. Inflation in the pipeline was robust as intermediate goods prices rose 1.3% m/o/m, 9.4% y/o/y and crude goods prices rose 4% m/o/m and 23.7% y/o/y. In term of the market reaction to the hotter than expected wholesale inflation, the market focuses much more on the CPI out tomorrow with the Fed solely focused on the core component. Also, the sharp drop in commodity prices of late eases some of the pressure for now.

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