Of the three reports released at 8:30 a.m., the consumer price reading was most anticipated on account of the spike in producer prices one day ago. However, the reading was in line with forecasts as headline prices advanced by 0.3 % during April for a 2.0% year over year increase. Stripping out the volatile food and energy components, the core annual pace of inflation reading of 1.8% was also in line with thinking.
With inflationary pressures remaining on target and showing few threats to Fed policy settings, the more interesting report was the weekly jobless claimant count, which at 297,000 was the lowest in exactly seven years. The claimant count fell by 24,000 last week as well as during the prior week. The Labor Department said that no states had estimated latest readings and there were no special factors at play and so the report gets a clean bill of health. The four-week moving average slipped marginally to 323,250. The insured rate among claimants through the prior week remained at 2.0% for a second week. This rate neatly maps the headline rate of unemployment and confirms the recent trend lower in that measure to 6.3%. So another decent granular piece of data from the labor market.
But perhaps the limelight may have been stolen, thus far at least, by the New York Fed’s regional survey known as the Empire manufacturing activity report for May. The index of general business activity came in at a blistering 19.01 from 1.29 and well ahead of an expected reading of 6.0. Indeed the highest forecast stood at 10.0 ahead of the report. The index advanced to its strongest since June 2010 indicating manufacturing is rebounding as the spring develops. The component pieces showed significant gains for shipments and employment as shown in the accompanying chart. The April manufacturing report is due for release later this morning.
Chart – Empire State index showed jump in activity, while labor and shipments vaulted ahead