Preview: US PPI And Jobless Claims


Economic data from the United States continues with the release of the producer prices index and the weekly jobless claims tomorrow.

Producer prices, seen as a leading indicator to gauge inflation, grew at a slower pace in February. But this is forecast to change as PPI could rise for March. Meanwhile, the jobless claims data for last week saw a decline to the lowest levels for the final week of March 2019.

The onset of economic data comes as the Federal Reserve Bank has pledged to keep interest rates unchanged for the rest of the year.

With inflation being the biggest concern, the March PPI data could show a glimpse into the overall performance of the consumer price index. While consumer prices briefly rose above the Fed’s 2% inflation target rate, it has since pulled back.

A weaker global economy and ongoing uncertainty about trade talks with China remain the key points for investors.

Producer Prices to Remain Anchored Close to 2%

The producer prices index data will be released by the Bureau of Labor Statistics today. Economists polled expect inflation at the factory gate to rise 0.3% on the headline and 0.2% on the core PPI.

Both measures of factory gate inflation are forecast to rise from 0.1% respectively from February. On a year over year basis, core PPI could slow from 2.5% in February to 2.4% in March. Meanwhile, headline PPI could remain unchanged, rising at a pace of 1.9% on the year.

Producer prices rose at a weaker pace in February.

This was mostly because of a weak increase in the final demand prices. After staying subdued during the previous three months, the final demand for prices rose 0.4% from 0.1% previously.

Excluding food and energy prices, the final demand index rose 0.1% after rising 0.2% in the month before, according to data from the Bureau of Labor Statistics.

We expect the PPI report to come in line with estimates. But the data will not play a major impact with investors already looking to the report for the next month. Producer prices tend to rise in April due to the Easter holiday which can see demand rising.

The first quarter economic performance has been somewhat subdued which looks to be discounted already.

Jobless Claims Forecast to Rise by 9,000

The weekly unemployment claims report saw the number of people filing for unemployment benefits fall to the lowest levels. For the final week of March, jobless claims fell to a 50-year low, according to data from the Labor Department.

US Initial Jobless claims, March 29, 2019
US Initial Jobless claims, March 29, 2019

The jobless claims reached 202,000 for the last week of March. This was the lowest level of claims ever on record since 1969. On a weekly basis, jobless claims were down by 10,000.

The jobless claims report came just before the official payrolls report saw the US economy adding 196,000 jobs during March. This beat estimates of an increase of 170,000. Payrolls rebounded from the slump in February which was revised higher to show 33k jobs being added.

However, looking forward, the jobless claims may start to rise. This comes as other data indicates that over 60,000 US workers lost their jobs in March. This was the worst quarter since 2015.

At the end of last week, the people who were laid off did not file for claims as yet. But this could reflect in the jobless claims over the coming weeks. Economists forecast the weekly jobless claims for the first week of April to rise to 211,000.

This would mark an increase in the jobless claims by 9,000. Despite the anticipated increase in jobless claims, the overall report shows that the numbers could be in line with the general trends.

As of last week, the four-week moving average for jobless claims inched lower, falling by 4,000 to 213,500. An increase in the weekly jobless claims report will still remain within the average.

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