- The PPI Ex Food & Energy for February rose .4% versus estimates of a .2% gain and a .2% increase in January.
- Initial Jobless Claims fell to 318K versus estimates of 328K and 330K the prior week.
- Continuing Claims rose to 2576K versus estimates of 2538K and 2528K prior.
- Empire Manufacturing for March fell to 1.9 versus estimates of 17.5 and a reading of 24.4 in February.
- Net Long-term TIC Flows for January rose to $97.4 billion versus estimates of $70.0 billion and $14.7 billion in December.
- The Philly Fed for March fell to .
BOTTOM LINE: Prices paid to US producers rose in February by the most in three months, Bloomberg reported. This morning's "hot" PPI was only 2.5% year-over-year vs. the 20-year average of 2.3%. The PPI is highly correlated with the CRB Index. This index has since weakened from February. Energy prices rose 3.5% last month after falling 4.6% the prior month. Prices of cigarettes surged 4.6%, the most since 2001. Prices for passenger cars fell 1.2% versus a .1% decline the prior month. I continue to believe inflation fears have peaked for this cycle. I expect the PPI to decelerate next month.
The number of US workers filing first-time applications for state jobless benefits fell last week to the lowest level in more than a month, signaling the labor market remains healthy, Bloomberg reported. The four-week moving average fell to 329,250 versus 339,500 the prior week. Wage growth, substantially above inflation, and low unemployment will continue to boost consumer spending, according to economists. The unemployment rate among those eligible for benefits, which tracks the US unemployment rate, rose to 2% versus 1.9% the prior week. I continue to believe the job market will remain healthy without generating substantial unit labor cost increases over the intermediate-term.
Manufacturing in NY state grew this month at a slower than expected pace, Bloomberg reported. The new orders component of the index fell to 3.1 versus 18.9 the prior month. The expectations component of the index fell to 35.2 versus 38.5 the prior month. The prices paid component rose to 30.2 versus 26.9 the prior month. This gauge is volatile historically and I expect a rebound next month.
Foreign investment in American securities rebounded in January, led by gains in purchases of corporate bonds and stocks, Bloomberg said. The US remained one of the world’s fastest-growing developed economies in the fourth-quarter and the country’s equity markets gained, helping to boost foreign demand for US assets. Private international investors bought $102.7 billion of long-term securities in January. Japan, the largest foreign owner of US Treasury securities, raised its holdings by $4.5 billion. Caribbean banking centers, which analysts link to hedge funds, sold a net $5.1 billion. I continue to believe demand for US assets by international investors will remain strong over the intermediate-term as economic growth accelerates back to average levels, stocks rise and the US dollar firms.
Manufacturing in the Philly region grew less than economists’ expected as companies reduced inventories, Bloomberg reported. The inventory component of the index fell to -3.7 from -1.9 the prior month. The prices paid component rose to 21.8 versus 15.8 the prior month. The new orders index rose to 1.9 versus .5 the prior month. The expectations component fell to 17.4 versus 20.3 the prior month. I continue to believe manufacturing will rebound modestly later this year on inventory rebuilding, stabilizing construction and rising auto production.
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