Wholesale prices rose in line with expectations in August, the final inflation data point as the Fed prepares to cut interest rates.
The U.S. Bureau of Labor Statistics said Thursday that the producer price index, a measure of the cost received by producers of final demand goods and services, rose 0.2% this month. This was in line with the Dow Jones consensus forecast.
Excluding food and energy, PPI rose 0.3%, slightly higher than the market consensus of 0.2%. Excluding trade services, core growth was the same.
The overall 12-month PPI rose 1.7%. Excluding food, energy and trade, the annual growth rate was 3.3%.
In other economic news Thursday, the Labor Department said initial jobless claims totaled 230,000 in the week ended Sept. 7, an increase of 2,000 from the previous period and higher than expectations for 225,000.
Stock futures were little changed after the report, while Treasury yields were mostly lower.
Within the PPI indicator, services prices drove most of the gains, rising 0.4% on the month, driven by growth in services minus trade, transportation and warehousing. Another important contributor was the 4.8% increase in room rental rates.
Commodity prices were unchanged from July, reversing July’s 0.6% gain.
The news comes a day after the U.S. Bureau of Labor Statistics reported that consumer prices rose 0.2% for the month, in line with expectations. However, the report also showed that core prices rose 0.3%, slightly higher than expected, driven primarily by higher housing-related costs.
On an annual basis, headline consumer price index (CPI) inflation fell to 2.5%, while core inflation remained at 3.2%.
Neither report is expected to prevent the Fed from lowering its benchmark interest rate by a quarter of a percentage point when its two-day policy meeting ends on Wednesday. The central bank’s main overnight borrowing rate currently targets a range of 5.25%-5.5%.
Chris Larkin, managing director of trading and investing at Morgan E-Trade, said: “The producer price index (PPI) basically repeated yesterday’s consumer price index (CPI) data, and jobless claims were also in line with expectations. , The Fed is ready to initiate a rate cut cycle. “The market is expecting an initial rate cut of 0.25%, but the discussion will soon turn to the extent and speed of the Fed’s possible rate cuts over time. “
Markets are pricing in some uncertainty about how much the central bank will cut rates, but recent data and statements from policymakers have prompted Wall Street to consider a more traditional move of a quarter of a percentage point rather than the more aggressive half-percentage point move. Cut interest rates. In addition, traders expect the Fed to cut interest rates by a full percentage point by the end of 2024, according to CME Group’s FedWatch indicator.
Fed officials have recently turned more of their attention to the slowing labor market.
The jobless claims report showed that while weekly job losses have risen slightly over the past few months, there has been no surge.
Continuing claims, which trailed one week, edged up to 1.85 million, an increase of just 5,000 from the previous period.
