Date: Friday, May 12, 2023
Source: Wall Street Journal
The U.S. economy showed fresh signs of cooling, with a reading of supplier inflation moderating and applications for unemployment benefits rising.
The producer-price index, which generally reflects supply conditions across the economy, increased 2.3% in April from a year earlier, the Labor Department said Thursday. That marked the slowest pace since January 2021 and an easing from March’s 2.7% rise.
Worker filings for unemployment benefits rose by 22,000 to a seasonally adjusted 264,000 last week, the highest level since October 2021, according to a separate Labor Department report. Jobless claims totals are above prepandemic levels, but still historically low.
Claims have trended upward this year, indicating layoffs are rising. Large companies in industries such as technology, real estate and finance have announced cuts in recent months.
Still, the labor market remains strong. Employers added 253,000 jobs in April, the best gain since January and the unemployment rate fell to match the lowest reading since 1969.
Producer prices rose 0.2% in April from the prior month, compared with a revised decline of 0.4% in March. The Labor Department attributed most of last month’s increase to higher supplier services prices. April’s increase matched a 0.2% average monthly rise in the two years before the pandemic.
“As the second half of 2023 wears on, producers may find their customers unable to weather higher costs,” PNC economist Kurt Rankin said in a note to clients. “Job cuts have already begun to spread beyond tech and financial services as businesses anticipate weaker demand and adjust their outlooks.”
Easing supplier inflation can signal a future easing of consumer prices, if businesses limit price increases or don’t raise them.
Consumer inflation edged slightly lower in April but remains historically high. The consumer-price index rose 4.9% last month from a year earlier, the Labor Department said Wednesday, down slightly from March’s 5% increase. The reading has eased from a recent peak of 9.1% in June 2022 but remains well above the Federal Reserve’s 2% inflation target.
Fed officials likely remain on course to pause interest-rate increases at their next meeting in June. The Fed has aggressively raised rates for more than a year to try to cool inflation by slowing economic activity. The central bank is looking to see signs of inflation declining toward its target.
The broader economy has shown some signs of cooling. U.S. economic growth slipped in the first quarter and consumer spending stagnated in February and March.