Price indexes reported this week showed the normal variability in the month-to-month changes, but on a year-over-year basis most prices are warming up.
The Consumer Price Index for March was cooler than expected for the month, easing by just 0.1 percent, but the gain over the previous 12 months climbed to 2.4 percent. This is well above the 1.6 percent year-over-year increase from last June. Core CPI, excluding food and energy, increased by a steady 0.2 percent month-to-month. Over the 12 months ending in March, core CPI was up by 2.1 percent, above the 1.7 percent year-over-year gain from last November.
The Producer Price Index for Final Demand increased by 0.3 percent for the month, driven by food prices. Transportation and warehousing was also warm, increasing by 0.6 percent for the month. Over the previous 12 months, the PPI for Final Demand was up by 3.0 percent. Core PPI (final demand PPI less food, energy and trade) increased by 0.4 percent for the month, and was up by 2.9 percent over the previous year. Higher crude oil prices in April could push petroleum product prices up again in April and May.
The headline import price index for the U.S. was unchanged in March, after a series of noticeable increases from last August through February. On a year-over-year basis, the import prices index is now up by 3.6 percent.
The National Federation of Independent Business’s Small Business Optimism Index eased slightly in March, down from a very high reading in February. The current range for the NFIB Index is on par with readings from 2004-2005. The labor market components of the NFIB survey remained strong in March.
Labor data this week was solid, standing in contrast to the weak 103,000 net payroll job gain for March that was reported on April 6.
Initial claims for unemployment insurance fell by 9,000 for the week ending April 7, to hit 233,000. Continuing claims increased by 53,000 for the week ending March 31, to hit 1,871,000. Despite the weekly increase in continuing claims, the four-week moving average for that series dropped to its lowest level since January 1974.
The rate of job openings eased slightly, to 3.9 percent in February, according to the Job Openings and Labor Turnover Survey. This is still a strong rate, consistent with a healthy job market. Same for the hiring rate, which eased to 3.7 percent in March.
Mortgage metrics show that home sales are holding up despite the upward pressure on finance charges. Mortgage applications declined by 1.9 percent for the week ending April 6. Purchase apps were down by 2.0 percent and refi apps were off by 1.7 percent. The four-week moving average for refi apps was down 13.4 percent from a year ago. Purchase apps are up 4.9 percent from a year ago. According to the Mortgage Bankers Association, the rate on a 30-year fixed rate mortgage eased to 4.66 percent for the week.
The minutes from the March 20-21 Federal Open Market Committee were released on Wednesday. Financial markets interpreted them as slightly hawkish relative to expectations, marginally increasing the odds of a fourth fed funds rate hike this year. According to the CME Group, the implied probability of a fourth fed funds rate hike in 2018, to 2.25-2.50 percent on December 19 notched up to 28.7 percent.
For a PDF version of this report click here: Comerica-Economic-Weekly-04132018.
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