New Jobless Claims and PPI Surge
People filing for unemployment insurance for the first time surged to 473,000 compared to the expectations of 430,000. On top of that the Producer Price Index (PPI) rose 1.4% which is considerable faster than the 0.4% that was expected.
The jobless claims numbers underscores the weakness in the jobs market. Unemployment/employment typically are lagging indicators but for the two previous recessions they have lagged considerably behind the recoveries and the length of the lag has grown. Granted we have only two recessions on which to compare, but if the trend continues it could be quite sometime before improvement is seen in the labor market. Hopefully, this wont be the case. The one bit of good news is that the continuing jobless claims is essentially unchanged and has been holding below the 5 million mark.
The increase in the PPI is itself potentially bad news because it could indicate that inflation might be returning and that would mean the Federal Reserve has to make a decision on what to do about it. Of course, most of the increase is due to the energy component of the index. Stripping out the volatile food and energy components the index increased only a 0.3% last month.