Surprises in Weekly Jobless Claims and Core Inflation

Weekly jobless claims rose by 20,000 to 362,000 and the prior week was revised higher by 1,000 to 342,000. Dow Jones was looking for a reading of about 350,000 and Bloomberg was calling for a reading of about 359,000 for the past week.

Data from four states were partially estimated in this report. The four-week average rose by 8,000 to 360,750 and the army of unemployed from the continuing jobless claims rose by 11,000 to 3,148,000 (with a one-week lag).

Yesterday’s Producer Price Index was up modestly, and as we expected there was no major change in consumer inflation for January. The headline Consumer Price Index (CPI) was flat in January, versus a Dow Jones estimate of +0.1%. What is interesting is that the core CPI reading, which kicks out food and energy, rose by 0.3%. The Dow Jones consensus for the core was for a gain of +0.2%. We would caution that, with gasoline having risen for more than 30 days until Wednesday of this week, this may be the last reading that is beneficial to consumers.

Neither of today’s readings are game-changing events. The problem is that investors and traders are trying to read into any bit of data that either points to a slowdown or to a halt ahead of the easy money Fed policy. Neither of today’s reports from the Labor Department are severe enough to sway us one way or the other.