US: Strong economic releases - Nomura

The research team at Nomura notes that the US posted strong producer prices for the month of April while there was a slight decrease in initial jobless claims.

Key Quotes

“Initial jobless claims: For the week ending 6 May, initial jobless claims decreased slightly to 236k from 238k one week earlier. Continuing claims, which lag initial claims reports by one week, decreased to 1918k from 1979k for the week ending 29 April. The four-week moving average of initial claims remains relatively unchanged at 244k versus 243k one week earlier. While initial jobless claims have remained within a somewhat steady range since fall of 2016, continuing claims have steadily declined over the past four months. The four-week moving average of continuing claims, at 1966k, stands well-below the reading of 2085k in early January. This sharp decline in continuing claims parallels the decline in the unemployment rate from the monthly household employment survey over this period. Today’s report indicates that claims continue to remain low as the labor market tightens further and layoffs remain subdued.”

“Producer prices: PPI for April increased 0.5% m-o-m, following a 0.1% decline in March, as the transitory weakness in energy prices in March faded. The strength was broad-based besides trade services prices (-0.3%), which represent profit margins of wholesalers and retailers. Food prices showed continued strength, increasing 0.9% after a similar reading in March. Energy prices increased 0.8% after a sharp drop of 2.9% in the prior month. Excluding food, energy, and trade prices, PPI increased strongly by 0.7%. The rebound in April PPI data suggests modest recovery in core CPI prices.”

“Q2 GDP Tracking Update: The relevant elements of PPI data, which are used for estimating deflators, on balance, came in stronger than we had expected. Thus, we revised downwards our Q2 GDP tracking estimate by 0.1pp to 3.3% from 3.4%.”