Jobless Claims & PPI - Not Looking Better
As we have been discussing for the last few weeks we continue to see renewed weakness in the jobs market despite claims to the contrary by the White House and mainstream media. No surprise today that we see new claims for unemployment benefits rising last week, back above the 400,000 level, as Initial claims for state unemployment benefits rose 27,000 to a seasonally adjusted 412,000 according to the Labor Department.
Surprise, the Economists polled by Reuters had forecast claims slipping to 380,000 and they have been consistently wrong as each week the prior week that they missed was then revised up higher - oh, just like this week, the prior weeks figure was revised up to 385,000 from the previously reported 382,000. More importantly, the four-week moving average of unemployment claims—a better measure of underlying trends—rose 5,500 to 395,750.
The rise in claims interrupted a downward trend that had kept them below the 400,000 threshold for four weeks. That level is normally associated with steady job growth. Despite last weeks rise, the four-week average held below the 400,000 mark for a seventh straight week.
Uh, not really, if you look at the chart we need to have claims below the 300,000 level to be even remotely associated with steady job growth. However, the real issue is that the reason that the claims number isn't significantly higher is that each week we now have individuals rolling off their extended benefits into the not classified, not counted and magically vanishing place of "having given up looking for work".
The number of people still receiving benefits under regular state programs after an initial week of aid fell 58,000 to 3.68 million in the week ended April 2, the lowest level since September 2008.
Great, where are all of those people because they aren't showing up in the hiring numbers? Here is the real number we need to be paying attention to:
A total of 8.52 million people were claiming unemployment benefits during that period under all programs.
This number is declining at a faster pace than the number of people were are putting to work. Maybe this is why we currently have 1 in 4 working age Americans on food stamps - the highest level ever recorded.
Inflation - We Don't Got No Stinkin' Inflation
Or do we? U.S. core producer prices rose slightly faster than expected in March and the increase from a year ago was the largest since August 2009, pointing to a broadening in pipeline inflation pressures.
The Labor Department said on Thursday its seasonally adjusted index for prices paid at the farm and factory gate - excluding volatile food and energy costs—rose 0.3 percent after gaining 0.2 percent in February.
Hmm, that can't be good. As prices rise for producers they have to pass those price increases along to the consumer OR they have to eat them internally which will impact their profit margins. With revenue being a concern for producers, and in a lot of cases it is really the lack of revenue, only so much profitability can be obtained through cost cutting and productivity increases. According to the report:
In the 12 months to March, producer prices increased 5.8 percent, the largest gain in a year, after rising 5.6 percent in February.
The culprit, of course, is rising energy and commodity prices are exerting upward pressure on inflation at the production level, however, don't get excited because "the Federal Reserve largely views this as transitory. Officials have, however, said they would act if necessary to ensure that an inflation psychology does not take root."
There is absolutely NOTHING to worry about - the Federal Reserve has everything under control. Move along - nothing to see here. Well, except for the invisible hand that is sapping the dollars out of your back pocket.