Daily Economic Update: Jobless Claims, CPI

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights jobless claims and the Consumer Price Index.

• Jobless claims continued their improving trend and reversed from last week's rise with a 16,000 decrease in new claims. Jobless claims are now at a four-week average of 386,250 which is the best reading so far. A month-to-month comparison shows a 20,000 improvement. The continued movement below 400,000 level suggests further gains in job market growth. There had been 984,000 net new job additions in the past 12 months to January. Assuming that jobless claims continue to trend down, NAR expects about 1.5 to 2 million net new jobs in the next 12 months.
• The Consumer Price Index (CPI) shows price pressures primarily coming from food and energy, with the headline index jumping 0.5 percent in February. The core index, excluding food and energy, also increased slightly, 0.2 percent. Energy prices jumped 3.4 percent in February 2.1 percent increase in January. Gasoline jumped the most, 4.7 percent, followed by heating oil spike of 4.1 percent. Both followed January increasing trend. Food price posted a 0.6 percent increase, following a 0.5 percent gain in January. The index for fruits and vegetables increased the most. A smaller increase in core CPI was driven by new vehicles, medical care, and airline fares. Cost of housing increased only marginally.
• Over the past year, overall CPI inflation increased to 2.2, while the index excluding food and energy rose to 1.1 percent. Today’s CPI report illuminates underlying inflation pressures which normally means that interest rates would be rising soon.
• Industrial production report released today shows decline in February which is led by decrease in utility use. Utilities were down due to milder weather in February. Manufacturing output, however, showed 0.4 percent increase, led by particularly sharp increase in output of motor vehicles and parts. Excluding autos, manufacturing rose a smaller 0.2 percent in January.
• Finally, a composite index of most of the economic indicators we track on a daily basis shows a jump again in February. The leading indicators index looks ahead to economic conditions over the next three to six months and tracks small business cycles. This is the eighth straight month of increase and suggests that the U.S. economic recovery is gaining traction. The index increased 0.8 percent in February after a small 0.1 percent gain in January. Eight of the 10 indicators in the index showed increases with higher consumer confidence and an improved labor market showing strongest gains. The housing market, however, is still trailing behind.