–Claims Suggest Labor Mkt Weakness;Contg Clms +5k to 3.756M, Wk Apr 30
By Joseph Plocek
WASHINGTON (MNI) – The latest initial jobless claims data suggest
labor market weakness is lingering, while the PPI data show rising
inflation. We’d suggest giving greater weight to the claims data,
though, as a slowing economy will mean price pressures cannot go too far
out of hand.
Initial Unemployment Claims fell 44,000 to 434,000 for the May 7
week. In the prior two weeks these claims were up 47,000 and 27,000,
respectively, so this dip reverses only a part of the recent surge.
This was also the case after early April’s gyrations, where on net
claims were higher.
Initial claims are approximately back to April’s average level of
432,000 but are still elevated from a 390,000 average in March. The
altered timing of the Easter holiday, storms and flooding, and possible
disruptions in the supply chain from the Japan disaster are possible
reasons for labor market weakening.
The Labor Department economist-in-charge said claims were upped in
Alabama due to storms but otherwise there was little apparent weather
effect. He did not comment on the seasonal adjustments. Claims for the
state of Virginia were estimated.
Continuing claims printed +5,000 to 3.756 million in the April
30 week. These also are elevated from the 3.70 million area in early
April.
So the bottom line is that the recent weakness in the labor market
seen in elevated claims appears to be in part fundamental and suggestive
of firings that precede slowing hiring.
In a separate report, the April PPI printed +0.8%, with core +0.3%
(+0.2834% unrounded), exceeding expectations.
April PPI is running +6.8% over the year overall, its worst pace
since +8.8% in September 2008. Core is running +2.1% over the year,
its highest since +2.3% in August 2009.
In core, cars at +0.5%, light trucks +0.6%, tires +4.8%, aircraft
+1.2% after -0.6% in March, and footwear +0.8% after -0.1% boosted the
total. There were only a few offsets with lower prices: men’s and boy’s
clothing -0.6%, textile house furnishings -0.5%, and home electronics
-1.1% were some. Rising demand in transportation is reflected in
better new auto sales and reports of rising prices, and comes despite
high fuel costs.
Food printed +0.3% and included gains in fruits and meats, and a
record +56.7% print in fresh eggs. A Bureau of Labor Statistics
economist suggested delayed plantings may have helped food costs rise.
Energy posted +2.5% in its seventh jump in a row as gasoline
printed +3.6% and liquefied petroleum gas, heating oil and natural gas
prices rose.
Intermediate PPI at +1.3% and Crude at +4.0% completed this dismal
picture. In intermediate, ethanol, plastics, and base chemicals rose.
In crude, wastepaper, scrap, and other metals gained. Some of these
pressures seem to stem from export demand.
It is unclear if the rising PPI will translate into broadly higher
prices before a slower economy breaks the gain.
**Market News International Washington Bureau: (202)371-2121**
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