PPI, wage data provide positive signs on inflation, whilst jobless claims remain low
After detailing why the CPI report wasn't as concerning as it seemed on the surface, the latest PPI and wage data has acted to reinforce the view that the US remains in a disinflationary cycle.
March PPI report shows additional disinflation, with a particularly positive downshift in services price growth
Core PPI for final demand less trade services saw MoM growth fall to 0.21%, or 2.5% annualised in March, the lowest MoM increase since November.
This acts to further reinforce that the MoM spike to 0.59% in January was an abnormality, as opposed to a shift towards a more enduring period of elevated MoM growth.
The second consecutive month of moderating MoM growth resulted in the 3-month annualised growth rate falling to 4.7% (from 5.0%) and the 6-month annualised growth rate falling to 3.2% (from 3.4%).
With the large spike in MoM growth in January set to roll-out of the equation, 3-month annualised growth could see a very significant decline in April.
Importantly, the moderation in core PPI for final demand less trade services was driven by the services category, with PPI for final demand services less trade, transportation and warehousing recording MoM growth of 0.22% in March or 2.6% annualised.
This is the lowest rate of MoM growth that has been seen since November, and the second consecutive month of moderating MoM growth.
This saw 3-month annualised growth moderate to 5.6% (from 6.5%) and 6-month annualised growth fall to 4.0% (from 4.3%).
As is the case with the overall core PPI less trade services index, with January’s MoM spike set to fall out of the YoY equation, the 3-month annualised growth rate may see a significant moderation in April.
