Mixed US Data: Here's the CPI Chart!
Last night's batch of US economic data painted a mixed picture, but the underlying message was clear: the economy is still moving, but it's starting to slow. Investors are focusing on employment data, retail spending, and the PMI, as all provide important clues to the Fed's future policy direction.
On the labor front, the report showed that November's Non-Farm Payrolls (NFP) rose by 64,000, slightly above the 51,000 forecast. However, the previous month's data was -105,000, and most tellingly, the unemployment rate rose to 4.6% (higher than the 4.5% forecast). This means that despite the job gains, the labor market still appears looser and less robust than the headline figure suggests.
Inflation, which is often linked to wages, is showing signs of easing. Average Hourly Earnings m/m were only 0.1%, down from 0.4% previously and well below the 0.3% forecast. This is usually interpreted as cooling labor cost pressures, which could help contain inflation, particularly in the services sector.
For consumption, the picture is two-pronged. Retail Sales m/m of 0.0% (flat) indicates overall spending is starting to slow down. But Core Retail Sales m/m of +0.4% was stronger than expected, suggesting core spending remains quite resilient—so demand hasn't "fallen," just weakened unevenly.
In business activity, the flash PMI remains in the expansionary zone, but down from the previous month. The Manufacturing PMI of 51.8 and the Services PMI of 52.9 were both lower than the previous month, indicating the economy is still growing, but momentum is weakening. Meanwhile, Business Inventories m/m of +0.2% rose above expectations, which could indicate companies are building up inventory—or it could signal inventory is starting to build as demand slows.
Judging by this data package, the Fed likely interprets the situation as: the economy is slowly cooling, wage pressures are easing, but core consumption is still holding up. Therefore, the market focus now shifts to the CPI tomorrow, Thursday. Given the combination of slowing wages and a falling services PMI, the chances of a "cool" CPI appear quite high, but strong core retail could keep core inflation somewhat stubborn. So tomorrow will be decisive: a benign CPI tends to strengthen the case for policy easing, while a hot CPI could cause the market to reverse the pricing of tighter interest rates.(asd)
Source: Newsmaker.id
