Producer price index November 2024:

A measure of wholesale prices rose more than expected in November, fueling belief that progress in reducing inflation has slowed, the Bureau of Labor Statistics reported Thursday.

He producer price indexwhich measures what producers get for their products at the final demand stage, rose 0.4% for the month, above the Dow Jones consensus estimate of 0.2%. In annual terms, the PPI rose 3%, the largest advance since February 2023.

However, excluding food and energy, the core PPI rose 0.2%, meeting forecasts. Furthermore, excluding commercial services, the increase in the PPI remained at just 0.1%. The 3.5% year-on-year increase was also the largest since February 2023.

In other economic news on Thursday, the Department of Labor reported that first-time claims for unemployment insurance totaled a seasonally adjusted 242,000 for the week ending December 7, considerably more than the 220,000 expected and 17,000 more than the previous period.

On the inflation front, the news was mixed.

Prices of final demand goods increased 0.7% in the month. the biggest movement since February of this year. About 80% of the move came from a 3.1% increase in food prices, according to the BLS.

Within the food category, chicken eggs soared 54.6%, adding to a widespread acceleration in items such as dried vegetables, fresh fruits and poultry. Retail egg prices rose 8.2% for the month and were up 37.5% from a year ago, the BLS said in a separate report Wednesday on consumer prices.

Services costs rose 0.2%, driven by a 0.8% increase in trade.

The PPI release comes a day after the BLS reported that the consumer price index, a most-cited indicator of inflation, also rose in November to 2.7% trailing 12 months and 0.3% month-over-month. month.

Despite the seemingly persistent state of inflation, markets overwhelmingly expect the Federal Reserve to reduce its key overnight borrowing rate next week. Futures traders are hinting at an almost certain cut of a quarter percentage point when the rate-setting Federal Open Market Committee concludes its meeting on Wednesday.

The Federal Reserve uses the Department of Commerce personal consumption expenditure price index as its main inflation indicator and forecasting tool. However, CPI and PPI data influence that measure.

A Atlanta Federal Reserve Tracker places the November PCE at 2.6%, 0.3 percentage points higher than in October, and the underlying PCE at 3%, 0.2 percentage points higher. The Federal Reserve is targeting 2% inflation and generally views core inflation as a better long-term indicator. Projections have not been updated to include the PPI release.

Stock market futures moved slightly into negative territory following the economic news. Treasury yields were mixed, while the rate cut odds next week they were still around 98%, according to the CME Group.

One reason markets expect the Federal Reserve to make cuts, even amid persistent inflation, is that Fed officials are increasingly concerned about the labor market. Nonfarm payrolls have seen increases every month since December 2020, but increases have slowed lately and Thursday brought news that layoffs could be rising as unemployment lasts longer.

Jobless claims hit their highest level since early October, while continuing claims, which are a week behind, rose to 1.89 million. The four-week moving average of continuing claims, which smooths out weekly volatility, rose to its highest level in just over four years.