- Initial claims for unemployment insurance rose by 3,000 to 220,000 in the holiday week ending September 9. The four-week moving average of initial unemployment
insurance claims fell by 5,000 to 225,000.
- Continuing claims were up by 4,000 to 1.688 million in the week ending September 2 but the four-week moving average fell by 6,000 to 1.697 million.
Initial Unemployment Insurance (UI) claims edged up by 3,000 in the holiday week ending September 9 to 220,000. The four-week moving average of claims, which smooths out some of the weekly volatility in this data, fell by 5,000 to 224,500. Weekly claims have trended around a low 235,000 mark – even before smoothing volatility with the four-week moving average mechanism – since mid-March of this year.
Continuing claims increased by 4,000 to 1.688 million in the week ending September 2. But the resulting four-week moving average of continuing claims fell by 5,000 to 1.697 million. The insured unemployment rate remained at 1.1 percent in the week ending September 2.
There appears to be a recent trough in continuing UI claims at the 1.7 million mark after the data had breached 1.8 million in early April. But despite a small rise through August of this year, the continuing claims numbers remain exceptionally low by any historical standard. This reflects the fact that laid-off workers continue to quickly find new jobs in the tight job market. The U.S. labor market continues to advance but is now doing so with gains that are much more consistent with the ongoing anecdotal talk of labor and skills shortages and average wage growth that is now trending above topline CPI inflation.
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Echoing the August CPI, a Huge Jump in Energy Prices Pushed the PPI Up by 0.7 Percent
PNC Senior Economic Advisor Stu Hoffman
- The Final Demand Producer Price Index (PPI) rose by 0.7% in August, driven higher by a 20 percent surge in gasoline prices.
- The Core PPI, excluding Food & Energy, increased by 0.3% in August for the second straight month. It edged up to 3.0 percent from August 2022.
- Final demand for services prices rose by 0.2 percent in August and moved down to 2.1 percent from August 2022 (from 2.4 percent in the year ending in July).
The Producer Price Index (PPI) for August posted a large gain of 0.7 percent, reflecting huge jumps in energy prices, echoing the CPI. The year-over- year rise in the August PPI was up to 1.6 percent from a 0.8 percent rise in July 2023 from July 2022. Food prices fell by 0.5 percent in August which was the fourth decline in the past five months. Some price relief will be felt at supermarkets as lower wholesale food prices are passed along to shoppers, especially for egg prices which have finally cracked.
The core PPI, which excludes food and energy components, was up by 0.3% in August for the second straight month. August core prices were up 3.0 percent from a year ago, about the same as in the three previous months.
Services price hikes are finally subsiding. The final demand services PPI rose by 0.2% in August and slowed to 2.1 percent from August 2022. This is down from 2.4 percent in the year ending in July 2023. Unlike Goods PPI and even the topline PPI result, Services PPI has not seen consistent declines since the start of 2023 that complicates interpretation of the year-over-year metric. Services PPI is up 1.7 percent at an annual rate in the first eight months this year – an acceptable result in perspective, but still in contrast to the Goods PPI’s rise of only 1.1% at an annual rate through August 2023.
Consumer spending remains focused on services despite ever-higher prices, with the 2023Q2 GDP report from the Bureau of Economic Analysis showing Real Personal Consumption Expenditures growth for services up 2.2% annually versus up 0.7% annually for spending on goods last quarter. And as long as consumers continue to spend on services, service providers will continue to pass along any and all rises in their own costs, especially higher labor costs, to their customers.
Despite the large increases in both the August CPI and PPI, the FOMC will look through those big gains, due mostly to higher energy prices, and hold the funds rate steady at 5.25-5.50 percent at their meeting on September 20, in contrast to today’s 25 bps hike by the ECB.
