Markets Allover the Place After US PCE and Unemployment Claims

Inflation has been falling in the US, but today’s PCE inflation numbers were sticky, which are helping the USD alongside the employment data. The JOLTS jobs report showed a dive below 8 million for September, bringing back the employment jitters. But yesterday’s impressive ADP employment and today’s Unemployment Claims numbers have removed those fears.

US September PCE Core Inflation:

• Core PCE (m/m): +0.3%, as expected; prior +0.1%.
• Unrounded core PCE: +0.254%.
• Core PCE (y/y): +2.7%, slightly above the +2.6% expected.
• Headline PCE inflation (y/y): +2.1%, matching expectations; prior +2.2% (revised to +2.3%).
• PCE deflator (m/m): +0.2%, as expected; unrounded +0.175% vs. +0.0907% prior.

US Consumer Spending and Income (August):

• Personal income: +0.3%, as expected; prior month +0.2%.
• Personal spending: +0.5% vs. +0.4% expected; prior month +0.2% (revised to +0.3%).
• Real personal spending: +0.4%, up from +0.1% prior (revised to +0.2%).

Unrounded inflation data here reveals slightly lower inflation figures, particularly for the core month-over-month, which was very close to being reported at +0.2%. Meanwhile, consumption figures have shown robust growth, as seen in the recent GDP report. Quarterly and annual trends indicate a decline in expenses, which could weigh on the USD and have an impact on inflation expectations.

US Initial Jobless Claims

• Initial claims: 216K vs. 230K expected; prior week revised from 227K to 228K.
• 4-week moving average: 236.5K vs. 238.75K last week.
• Continuing claims: 1.862M vs. 1.885M expected; prior week revised from 1.897M to 1.888M.
• 4-week moving average of continuing claims: 1.869M vs. 1.8585M last week.

Notable State Changes in Initial Claims (week ending October 19):

• Increases: Florida (+4,501), Kansas (+304), Wisconsin (+222), Hawaii (+103), Idaho (+101).
• Decreases: New York (-2,785), North Carolina (-2,767), California (-2,012), Texas (-1,865), Georgia (-1,852).

Recent data may reflect the impact of the recent hurricane, yet the overall trend remains negative. Tomorrow, the Bureau of Labor Statistics (BLS) is set to release the US nonfarm payrolls (NFP) report, with expectations of 108,000 new jobs and an unemployment rate at 4.1%. Both the hurricane and a recent strike may influence this month’s employment numbers, although yesterday’s ADP employment report came in significantly stronger than expected, suggesting continued resilience in the job market.

US Q3 Employment Cost Index:

• Employment cost index: +0.8% vs. +0.9% expected; prior quarter +0.9%.
• Wages (QoQ): +0.8% vs. +0.9% prior quarter.
• Benefits (QoQ): +0.8% vs. +1.0% prior quarter.

BLS Highlights on Compensation Costs:

• Civilian worker compensation costs rose +0.8% (seasonally adjusted) from June to September.
• Civilian worker compensation (y/y): +3.9%, down from +4.3% in September 2023 (slowing).
• Wages/salaries for civilian workers (y/y): +3.9%, down from +4.6% in the prior year (slowing).
• Benefit costs for civilian workers (y/y): +3.7%, down from +4.1% in the prior year (slowing).
• Private industry compensation (y/y): +3.6%, down from +4.3% in September 2023 (slowing).
• Wages/salaries in private industry (y/y): +3.8%, down from +4.5% prior year (slowing).
• Private industry benefit costs (y/y): +3.3%, down from +3.9% in the prior year (slowing).
• Inflation-adjusted wages and salaries for private industry: +1.2% over the past 12 months.