US headline PPI declined -0.5% in July and the core rate was up 0.2%, again missing on the downside, after respective gains of 1.0% (was 1.1%) and 0.4% in June. This is the first monthly drop since April 2020 and is off of the all-time high of 1.7% from March (data goes back to 2009). Most of the major components except food cooled last month. In the meantime, initial jobless claims jumped 14k to 262k in the week ended August 6, following unusually big downward claims revisions in the last two weeks, leaving what is still a big 4-month climb from the 53-year low of 166k in March. The 4-month uptrend in initial claims and the 10-week uptrend for continuing claims suggest downside risk for our 230k August nonfarm payroll estimate, and much greater downside risk into Q4.
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Stuart Cowell
Head Market Analyst
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