–Initl Unemployment Claims -29k to 429k Jul 10 Wk, Seasonal Adj Suspect
By Joseph Plocek
WASHINGTON (MNI) – The U.S. June PPI report was benign and slightly
less than expected, printing -0.5% overall in a third monthly drop and
+0.1% (+0.0576% unrounded) in the core.
These monthly results put PPI up 2.8% over the year overall and up
1.1% in core, paces that appear to be moderating — but not falling —
from earlier in the economic recovery.
Energy printed -0.5% as all areas fell, and Food posted -2.2%
(accounting for 80% of the overall drop) on dips in fruits, vegetables,
and soft drinks. The drop in food prices was the largest since -2.9% in
April 2002. In vegetables, tomatoes, cauliflower, and eggplant had large
drops, and in fruits melons and berries fell most.
Core PPI was held down by -1% in light trucks but boosted by +1.4%
in cigarettes and +0.4% in aircraft. Footwear, soaps, toys and floor
coverings also dropped in price, as did metal cutting tools,
transformers, and computers in the capital goods sector.
Intermediate PPI at -0.9% and Crude at -2.4% on weak demand for
metals, also suggest no pipeline pressures.
The more important CPI report is released Friday, and also is
expected by private economists to be benign.
Separately, the Labor Department reported Initial Unemployment
Claims fell 29,000 to 429,000 in the July 10 week, but said this partly
reflects seasonal glitches.
No states estimated. However, the seasonal adjustment factor looked
for a 17% gain in a second week of normal increase, i.e. it expected
+80,000 due to manufacturing layoffs for vacations. But unadjusted
data showed +9.6% or +44,855 claims.
It was “not just a G.M. thing” a Labor Department economist said
at release, explaining that the move was more diverse across industries.
Claims were 476,000 in mid-June, and adding back the last two
weeks’ declines (impacted by the Independence Day holiday and seasonals
that expect routine plant closings) brings them back to about that
level. So any signal from this data set remains suspect.
Continuing claims in the July 3 week jumped 247,000 to 4.681
million, offsetting the prior week’s 203,000 drop. This series has
hovered at about the current level since March and is signaling a slow
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