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CPI Core Stronger, Jobless Claims Drop & More


Thursday, September 12, 2019

Following a slightly better-than-expected August Producer Price Index (PPI) headline Wednesday, this morning we see its counterpart, the Consumer Price Index (CPI), arrive in-line with estimates: +0.1% is lower than the +0.3% we saw in July. Subtracting food and energy costs (the “core” read, which filters out near-term price volatility) rose to 0.3% — higher than July’s 0.2%, which was also the consensus estimate.

On the core read, the annualized figure came in at +2.4% — again, a little higher than analysts had been expecting. Like the PPI numbers yesterday, there’s nothing earth-shattering to see here. By that we mean there is no expectation next week’s decision by the Fed to lower interest rates again will be impacted at all. That said, it’s overall a positive for the economy to see PPI and CPI reads headed in a positive direction, albeit slowly.

Initial Jobless Claims dropped notably to 204K last week — down toward the bottom of the 200-225K range we’ve seen more or less over the past 100 weeks or so. This was down 15K claims from the previous week’s upwardly revised 219K, which is where the past month or so of new claims data had been residing.

Continuing Claims also dipped, to 1.670 million two weeks ago, from the upwardly revised 1.674 million reported for the previous week. This has been one of the most quietly impressive reads of all jobs data over the past year or more: these numbers remain near half-century lows even as weekly claims tend to fluctuate a bit. This means even when Americans do lose their job, they tend not to stay unemployed for long. Another plus for the the domestic labor market.

Outgoing European Central Bank (ECB) President Mario Draghi is speaking at this hour, offering no notable unexpected comments on the state of the Eurozone and the ECB’s role within it. Draghi said there continues a need for a “highly accommodating stance” and that the bank is “ready to adjust all instruments.” Considering the stormy ride Draghi has captained the ECB through, expectations look admirably steady.

Draghi continued to cite “muted inflationary pressures” and “geopolitical uncertainty” (read: Brexit, U.S.-China trade war), and expectations are solid that quantitative easing (QE) in the EU will continue, even as Christine Lagarde — who had directed the International Monetary Fund (IMF) since 2011 — assumes the mantle of ECB president. Lagarde has already publicly stated she approves of low rates at the ECB, and she is scheduled to take over November 1st.

Just when you thought earnings season was over, supermarket giant Kroger Corp. KR reported Q2 earnings before the opening bell this morning, beating on the bottom line by 3 cents to 44 cents per share. Revenues, however, came in short by 0.81% for the quarter to $28.17 billion, though up from $27.87 billion in the year-ago quarter. Kroger shares are still down 7% year to date, and are only up slightly on the news in today’s pre-market. For more on KR’s earnings, click here.

Mark Vickery
Senior Editor

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