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TABLE-The latest in key economic data ahead of Fed's Sept. 20-21 meeting

TABLE-The latest in key economic data ahead of Fed's Sept. 20-21 meeting

Reuters · 09/13/2022 15:03
TABLE-The latest in key economic data ahead of Fed's Sept. 20-21 meeting

- The U.S. central bank has lifted interest rates by three-quarters of a percentage point at each of its last two policy meetings, and Federal Reserve Chair Jerome Powell said another "unusually large" increase could be appropriate at the Fed's Sept. 20-21 meeting, depending on whether economic data points to progress in reducing the highest inflation in four decades.

Data Tuesday gave joy in that regard, as a Labor Department report showed underlying inflation accelerated in the last month. Fed funds futures traders see a 75 basis point rate hike in September as the most likely outcome, according to the CME Fedwatch tool, as do most economists polled by Reuters .

Below is a dashboard of some of the key indicators that have been or will be released during the lengthy eight-week gap between the Fed's July and September meetings, and an assessment of their impact on the Fed's calculus.


Date

Report

Data type

Result

Builds case for or against "unusually large" Sept hike?

Story

Sept 13

CPI

Inflation

The best-known measure of U.S. inflation had been expected to fall in August from July, but it rose instead, and from a year earlier was up 8.3%. Core inflation excluding volatile food and energy prices also accelerated.

For: Inflation isn't cooling, making it unlikely the Fed will want to downshift its rate-hike path.

Sept 2

Nonfarm payrolls ( jobs & UE rate)

Labor market

Employers hired 315,000 workers in August, down from July; the unemployment rate rose to 3.7% from 3.5% as more workers rejoined the labor force

Against: The Fed may take comfort on signs that demand for labor is easing even as supply rises

Sept 2

Nonfarm payrolls (avg. hourly earnings)

Inflation

Average hourly earnings rose 0.3% in August from July, down from the previous month's 0.5% gain.

Against: Moderating wage growth suggests easing upward pressure on inflation.

Sept 1

ISM manufacturing (activity index)

Industrial production

Manufacturing activity did slow in August; makers of computer and electronics reported strong demand

For: Activity has slowed since the Fed began raising rates, but the lack of progress last month may suggest more pressure is .

Sept 1

ISM manufacturing (prices paid index)

Inflation

Prices rose at the slowest since June 2020

Against: Suggests demand and supply are coming into better balance, a key Fed aim.

Sept 1

Jobless claims

Labor market

New unemployment benefit claims fell to a two-month low

For: The labor market remains tight

Aug 30

JOLTS

Labor market

Job openings rose unexpectedly in July, to 11.24 million, meaning there were two open jobs for every job seeker. Data for June job openings was revised higher.

For: Demand for labor remains high, despite the Fed's aggressive rate hikes aimed at slowing growth

Aug 26

UMich consumer inflation outlook (F)

Inflation expectations

One-year inflation expectations fell to an eight-month low of 4.8% from 5.2% in July as gas prices eased; the five-year inflation outlook was unchanged at 2.9%.

Against: But only barely, as longer-term inflation expectations did deteriorate but did they improve.

Aug 26

Personal spending & income

Consumption

Spending rose 0.1% in July, less than expected, after advancing 1.0% in June

Against: Adds to evidence of the economy softening

Aug 26

PCE price index

Inflation

The Fed's preferred inflation measure slipped 0.1% last month compared with June, the first drop since April 2020; from a year earlier it rose 6.3%, down from 6.8% in June.

Against: Cooling inflation pressures are a welcome sign, though policymakers want to see more evidence before they will feel confident about the direction of price pressures.

Aug 25

GDP (2nd read)

Economic growth

Q2 contraction was more moderate than indicated in the advance reading from a month earlier; consumer spending revised up; GDP deflator revised higher

For: While 2 months in the rearview mirror, it showed consumption had rebuilt momentum coming into the current quarter and inflation as measured by the GDP deflator was still far too high

Aug 25

Jobless claims

Labor market

New claims edged lower for a second week and both that and continued claims dropped to the lowest in a month

For: The continuing claims portion - a proxy for hiring - covered the survey week for week's August payrolls report, suggesting tight labor market conditions persist

Aug 18

Jobless claims

Labor market

New claims fell and the prior week was revised lower

For: Still sign of widespread job losses

Aug 17

Retail sales

Consumption

Headline flat but the core figure was up more than expected at 0.8% from the prior month, indicating real stalling yet in consumer spending

For: The Fed would like to see consumer demand weakening, just shifting to other spending categories as gasoline prices drop

Aug 12

UMich consumer inflation outlook (P)

Inflation expectations

The 1-year outlook dropped to 5.0% from 5.2% but the five-year expectation ticked back up to 3.0% from 2.9%

A wash: On the upside, the impetus for long-term expectations to rise further appears to have faded but they are yet moving toward the prevailing pre-COVID trend

Aug 11

PPI

Inflation

Producer prices unexpectedly fell, and rose less than expected even when excluding energy and food

Against: Like CPI, this downside surprise on inflation has markets expecting a hike of 50 bps

Aug 10

CPI

Inflation

Headline came in well below expectations and even the ex-food/energy component was softer than most forecasts

Against: Arguably the first pleasant surprise for the Fed on the inflation front in a long time. BUT ... officials have been repeatedly burned in prior attempts to call a top, and a lot of the relief came from the drop in gas prices alone

Aug 5

Nonfarm payrolls (avg. hourly earnings)

Inflation

Wage gains were much stronger than expected and the prior month's increase was revised up

For: sign yet that 225 basis points of tightening is putting a dent in the pace of wage gains

Aug 5

Nonfarm payrolls ( jobs & UE rate)

Labor market

Headline jobs creation of 528k was much stronger than expected and closed the remaining deficit of jobs lost during the pandemic

For: sign yet that 225 basis points of tightening is putting a dent in the pace of hiring.

Aug 4

Jobless claims

Labor market

New claims in the 250-260k range for a third straight week, the highest since November; continued claims highest since April

For: headline inflated by seasonal factors, with the NSA claims closer to 200k and showing labor market remains tight

Aug 3

ISM services (prices paid index)

Inflation

The prices paid index dropped by the most in five years

Against: along with ISM's factory series, another signal of input price pressures easing

Aug 3

ISM services (activity index)

Service sector activity

Services activity picked up unexpectedly, with order growth the strongest in four months; employment index contracted moderately for a second month

Against: activity more consistent with soft-landing than recession

Aug 2

JOLTS

Labor market

Job openings declined by the most in more than two years

A wash: openings-to-unemployed ratio at 1.8:1 is down from March's 2:1 high but has further to go

Aug 1

ISM Manufacturing (prices paid index)

Inflation

July's index for input prices plunged to lowest in two years

Against: shows input price pressures easing

Aug 1

ISM Manufacturing (activity index)

Industrial production

July's factory activity slowed, though a bit less than expected

Against: indicates further ebbing of goods demand

July 29

UMich consumer inflation outlook (F)

Inflation expectations

July's final 5-year expectation fell to lowest since December

Against: moderate positive for Fed effort to keep inflation expectations anchored

July 29

Employment Cost Index

Wage inflation

Q2's employment costs moderated less than expected

For: indicates wage pressures remain sticky

Upcoming data:

Sept 14

PPI

Inflation

Sept 15

Retail sales

Consumption

Sept 15

Jobless claims

Labor market

Sept 16

UMich consumer inflation outlook (P)

Inflation expectations


(Compiled by Federal Reserve reporting team; Editing by Dan Burns, David Holmes, Paul Simao, Elaine Hardcastle, Susan Fenton and Jonathan Oatis)

((Daniel.Burns@thomsonreuters.com;))