LIVE MARKETS-Double Fedder: Cooling PPI, tame jobless claims

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DOUBLE FEDDER: COOLING PPI, TAME JOBLESS CLAIMS

Both halves of the Fed's dual mandate - price growth and employment - were given a moment in the sun by Thursday's economic data.

A third major take on February inflation showed price growth hasn't strayed from its meandering path down to the Fed's target rate.

The good news is the Labor Department's Producer Price Index (PPI) USPPFD=ECI, which tracks the prices U.S. companies get for their goods and services at the figurative factory door, was unchanged last month, defying analyst expectations for a 0.3% gain.

The bad news is that the prior month's data was hiked to a fairly-hot 0.6% from the previously stated 0.4%.

Year-on-year, PPI grew by 3.2%.

Again, this was cooler than the 3.3% consensus but follows in the wake of an upwardly revised 3.7% annual growth in January.

Striking food and energy, PPI inched 0.1% lower instead of rising 0.3% as economist predicted, but again the January number was upped to 0.5% from 0.3%.

Core PPI, which excludes food, energy and trade services, cooled down on monthly and annual bases to 0.2% and 3.3%, respectively.

All told, the report "confirms that inflation is softening, which is exactly the kind of news this stock market needs, as tariff fears heat up," writes Paul Stanley, chief investment officer at Granite Bay Wealth Management. "Coupled with Wednesday's softer CPI, it's possible that the Federal Reserve may consider cutting interest rates sooner-than-expected, potentially as early as this summer."

"The real worry is the inflationary effects that may come from tariffs, which is a wildcard for markets and the Federal Reserve," Stanley adds.

The tenacious Labor Department also reported that last week 220,000 U.S. workers joined the queue outside the unemployment office USJOB=ECI; a slight downtick from the week prior and 5,000 fewer than analyst forecasts.

It should be noted that the thousands of federal workers axed as part of billionaire Elon Musk's DOGE purge do not show up in this data.

Instead, they avail themselves of The Unemployment Compensation for Federal Employees (UCFE), which releases its data on a one-week lag.

"The jobless claims data continue to reflect a labor market characterized by few private-sector layoffs but limited employment opportunities for those who are unemployed," says Nancy Vanden Houten, lead U.S. economist at Oxford Economics. "Claims for benefits by federal employees dipped slightly in the week ended March 1, but are up 70% year-to-date compared to 2024."

Ongoing claims USJOBN=ECI, also reported on a one-week delay, dipped 1.4% to a still-elevated 1.870 million, continuing to soar well above the pre-COVID average and echoing consumers' deteriorating job market views.

(Stephen Culp)

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