Stock Market Report: July PPI Surges

Today’s U.S. reports revealed huge 1.0% headline and core PPI gains in July that rounded down from respective increases of 1.032% and 1.042%, leaving figures that actually beat the 1.0% gains for both in June. We saw a fourth consecutive all-time high, of 7.8%, for the headline y/y metric, and a fifth consecutive all-time high, of 6.2%, for the core.

Today’s huge upside PPI surprise follows yesterday’s solid but moderating CPI gains, leaving a mix that will keep inflation concerns alive even as economists continue to expect a slowing in monthly price gains into year-end. We also saw a -12k initial claims drop to 375k in the first week of August that largely tracked estimates.

More importantly, continuing claims fell -114k to a 2,866k new cycle-low, after last week’s -316k plunge to a 2,980k (was 2,930k) prior cycle-low. The encouraging claims data over the last two weeks have boosted our August nonfarm payroll estimate to 750k from 650k, which exceeds the 617k average thus far in 2021.

  • PPI rose 1.0% in both June and July, leaving the y/y metric rising to a fourth consecutive all-time high, of 7.8%.
  • PPI core rose 1.0% in both June and July, leaving the y/y metric rising to a fifth consecutive all-time high, of 6.2%.
  • We saw a 0.6% PPI rise on the old SOP basis, after gains of 1.2% in June, and 1.1% in May.
  • Initial claims fell -12k to 375k, after falling -12k to 387k (was 385k).
  • Continuing claims fell -114k to a 2,866k cycle-low, after last week’s -316k plunge to a 2,980k (was 2,930k) prior cycle-low.
  • The insured jobless rate fell to a 2.1% cycle-low from a 2.2% (was 2.1%) prior low.
  • The Langer consumer comfort index rose to 54.6 from 53.3, versus a 52.6 average in July.

Contents

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PPI

The PPI report sharply beat estimates again, with a repeat of the 1.0% headline and core gains seen in June, leaving seven months of outsized gains, and two consecutive record-high core price gains. The July gains rounded down from respective increases of 1.032% and 1.042%, leaving slightly larger gains than seen in June. We saw gains of 0.6% for goods prices and 1.1% for service prices. The y/y PPI gain rose to a fourth consecutive all-time high of 7.8% from 7.3% in June, 6.6% in May, and 6.2% in April, using data since the 2009 methodology change. The core y/y gain rose to a fifth consecutive all-time high of 6.2%, from 5.6% in June, 4.8% in May, 4.1% in April and 3.1% in March.

For components, we saw July goods component swings of 2.6% for energy prices and -2.1% for food prices. We saw a 1.7% July rise in trade services, after a 2.1% June surge. We saw a 2.7% surge for transportation and warehousing services, after a 0.9% June rise. We saw a 0.6% rise for “other” service prices, after a 0.3% June rise. There was outsized strength in automobiles retailing, where prices surged 17.4%, and in TV, video, and photographic equipment supplies, where prices surged 13.3%.

On a moving average basis, PPI headline and core gains are trending sharply higher. We have 6-month average price gains of 0.822% for the headline and 0.705% for the core that beat respective 12-month average gains of 0.621% and 0.506%.

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We’re seeing a steep upward ratcheting in all the various inflation metrics, beyond the climb that was widely expected due to “base effects.” Price gains have been led by sectors plagued with supply chain disruptions and inventory shortages, leaving big price gains in aggregate despite pandemic-related weakness in some sectors.

In August, we assume PPI gains of 0.3% for the headline and 0.5% for the core, which would allow the y/y headline metric to rise to a 7.9% new all-time high from today’s 7.8% for July. We expect the core price gain to rise to a 6.6% new all-time high from today’s 6.2%. The y/y metrics should end in 2021 around 7.4% for the headline and 7.0% for the core.

We saw July CPI gains of 0.5% for the headline and 0.3% for the core. We expect July PCE chain price gains 0.4% for the headline and 0.3% for the core. Trade prices are poised for July gains of 0.7% for imports and 0.8% for exports.

PPI for final demand, 1-month percent change, seasonally adjusted

MonthTotalGoodsFoodsEnergyGoods less foods and energyServicesTradeTransportation and warehousingServices less trade, transportation, and warehousing
Jan-100.90%1.10%0.10%4.50%0.30%0.80%1.40%0.70%0.60%
Feb-10-0.20%-0.60%0.30%-3.70%0.20%0.00%-0.10%0.10%-0.10%
Mar-100.10%0.70%2.30%0.50%0.30%-0.30%0.10%0.30%-0.50%
Apr-100.30%0.20%-0.70%0.50%0.30%0.40%0.30%0.30%0.50%
May-100.20%0.00%0.00%0.00%0.10%0.40%0.70%0.50%0.20%
Jun-10-0.20%-0.40%-2.90%0.00%0.00%-0.10%-0.50%0.90%0.10%
Jul-100.20%0.10%1.20%-0.40%0.00%0.20%-0.30%0.60%0.30%
Aug-100.20%0.60%0.10%2.40%0.20%-0.10%-0.30%-0.60%0.10%
Sep-100.30%0.40%1.20%0.50%0.30%0.30%0.90%0.00%0.00%
Oct-100.40%1.10%1.30%3.60%0.10%0.00%-0.30%0.70%0.10%
Nov-100.30%0.60%1.50%1.40%0.20%0.10%0.00%0.60%0.10%
Dec-100.30%1.00%1.10%2.90%0.40%0.00%0.20%0.30%-0.10%
Jan-110.60%0.90%0.90%2.00%0.60%0.40%-0.10%1.00%0.50%
Feb-110.60%1.20%3.80%1.50%0.50%0.10%0.40%1.00%-0.10%
Mar-110.70%0.70%-0.70%3.30%0.40%0.60%1.40%1.30%0.10%
Apr-110.50%1.00%0.50%2.90%0.50%0.30%0.00%0.60%0.40%
May-110.30%0.50%-1.10%2.50%0.20%0.20%0.70%0.90%-0.20%
Jun-110.10%-0.20%0.50%-2.10%0.30%0.20%0.00%-0.10%0.40%
Jul-110.20%0.40%0.40%0.20%0.30%0.10%-0.40%0.10%0.30%
Aug-110.20%-0.30%1.10%-2.40%0.20%0.40%1.00%0.50%0.20%
Sep-110.40%0.70%0.70%2.30%0.30%0.20%0.40%0.50%-0.10%
Oct-11-0.40%-0.40%-0.80%-1.00%0.00%-0.40%-1.10%0.10%0.10%
Nov-110.30%0.30%0.90%0.90%-0.10%0.40%0.40%0.20%0.30%
Dec-11-0.10%-0.20%-0.80%-0.80%0.00%-0.20%-0.30%0.30%-0.10%
Jan-120.40%0.40%0.50%0.60%0.50%0.50%0.80%0.10%0.30%
Feb-120.30%0.40%-0.10%1.10%0.10%0.30%0.70%0.80%0.00%
Mar-120.20%0.30%0.60%0.00%0.30%0.20%0.60%0.70%-0.10%
Apr-120.30%-0.10%-0.30%-0.80%0.10%0.30%0.10%0.40%0.50%
May-12-0.10%-0.70%-0.20%-3.10%0.10%0.30%0.90%0.20%-0.20%
Jun-12-0.30%-0.60%0.30%-3.00%-0.30%-0.10%-0.20%-0.30%0.10%
Jul-12-0.10%0.20%1.10%-0.70%0.30%-0.10%-0.60%-0.40%0.10%
Aug-120.30%1.20%1.10%4.80%0.10%-0.30%-1.20%0.40%0.20%
Sep-120.70%0.90%0.50%3.90%0.10%0.50%0.90%0.40%0.30%
Oct-120.10%0.10%0.00%0.20%0.00%0.10%0.50%0.40%-0.10%
Nov-120.10%-0.50%0.70%-3.50%0.20%0.60%1.30%-0.20%0.20%
Dec-120.00%-0.20%-0.40%-0.70%0.10%0.10%0.10%0.00%0.10%
Jan-130.30%0.50%1.00%1.30%0.10%0.00%-0.40%0.00%0.20%
Feb-130.20%0.60%-1.00%3.20%0.30%0.00%-0.50%0.10%0.30%
Mar-130.00%-0.50%0.80%-3.60%0.10%0.30%0.40%0.30%0.20%
Apr-13-0.20%-0.70%-1.70%-2.20%0.00%0.10%0.40%-0.80%0.10%
May-13-0.10%0.30%0.90%0.50%0.00%-0.30%-1.10%0.00%0.10%
Jun-130.40%0.00%-0.20%0.10%0.10%0.50%0.90%0.40%0.30%
Jul-130.20%0.00%0.30%-0.30%0.00%0.40%0.80%0.40%0.10%
Aug-130.10%0.30%-0.70%1.50%0.10%0.00%-0.50%0.20%0.20%
Sep-130.00%-0.20%-0.20%-0.70%0.00%0.10%0.20%0.00%0.10%
Oct-130.20%0.10%0.30%0.20%0.10%0.30%0.20%0.30%0.30%
Nov-130.20%0.20%0.10%0.20%0.10%0.10%0.30%-0.50%0.20%
Dec-130.10%0.40%0.00%1.00%0.40%-0.10%-1.10%1.70%0.10%
Jan-140.30%0.60%0.90%1.30%0.50%0.10%0.30%-1.00%0.20%
Feb-140.20%0.30%0.40%0.20%0.10%0.20%0.60%-0.30%0.10%
Mar-140.40%0.30%1.30%0.50%-0.10%0.50%0.60%0.70%0.20%
Apr-140.10%0.40%2.30%-0.20%0.20%-0.10%-0.50%0.90%0.10%
May-140.20%-0.30%-0.90%-1.20%0.00%0.40%1.20%0.50%-0.10%
Jun-14-0.10%0.00%-0.10%0.00%0.10%-0.10%-0.60%-0.10%0.20%
Jul-140.40%-0.10%0.00%-1.00%0.20%0.60%1.60%0.20%0.10%
Aug-140.00%0.00%-0.30%-0.20%0.10%0.00%-0.50%0.30%0.30%
Sep-14-0.20%-0.30%0.10%-1.80%0.20%-0.20%-0.80%-0.20%0.10%
Oct-140.20%-0.50%0.50%-3.20%0.00%0.50%1.80%-0.50%0.00%
Nov-14-0.20%-0.40%0.20%-2.00%-0.10%0.00%-0.30%-0.10%0.20%
Dec-14-0.30%-1.30%0.00%-7.20%0.00%0.30%0.60%0.10%0.10%
Jan-15-0.60%-1.80%-0.70%-9.50%0.10%0.00%0.40%-1.10%-0.10%
Feb-15-0.50%-0.30%-1.70%0.70%-0.10%-0.50%-1.60%-0.80%0.10%
Mar-150.20%0.20%-0.80%1.90%-0.10%0.10%0.20%0.00%0.00%
Apr-15-0.20%-0.60%-0.80%-2.80%0.00%0.10%-0.30%-0.30%0.40%
May-150.40%1.00%0.60%5.00%0.20%0.10%0.20%0.30%-0.10%
Jun-150.30%0.50%0.30%0.80%0.30%0.20%0.30%0.00%0.20%
Jul-150.20%-0.10%-0.30%-0.60%0.10%0.30%0.80%-0.10%0.10%
Aug-15-0.20%-0.50%0.30%-2.60%-0.20%0.00%-0.40%-0.70%0.30%
Sep-15-0.40%-1.10%-0.30%-5.90%0.00%0.00%0.30%-0.20%-0.20%
Oct-15-0.30%-0.40%-0.70%-0.60%-0.20%-0.30%-0.50%-0.30%-0.10%
Nov-150.10%-0.10%-0.10%-0.10%-0.10%0.20%0.40%0.10%0.10%
Dec-15-0.10%-0.60%-0.90%-3.50%0.00%0.20%0.30%-1.00%0.30%
Jan-160.40%-0.50%0.60%-3.90%0.10%0.80%1.30%0.40%0.60%
Feb-16-0.30%-0.70%-0.10%-4.20%0.10%0.00%-0.30%-0.40%0.10%
Mar-160.00%0.30%-1.30%2.50%0.10%-0.20%-0.70%0.00%0.00%
Apr-160.20%0.30%-0.30%1.50%0.30%0.10%0.00%-0.30%0.20%
May-160.20%0.60%0.10%2.40%0.20%0.00%0.30%-0.30%0.00%
Jun-160.50%0.70%0.50%3.00%0.20%0.40%0.70%0.00%0.20%
Jul-16-0.10%-0.10%-0.40%0.10%0.10%-0.10%-0.80%0.50%0.30%
Aug-16-0.20%-0.30%-1.20%-1.30%0.10%-0.10%-0.50%0.00%0.20%
Sep-160.30%0.40%0.80%1.40%0.00%0.30%0.50%-0.70%0.20%
Oct-160.30%0.40%-0.90%2.80%0.20%0.10%0.20%0.40%0.00%
Nov-160.20%-0.10%-0.40%-0.70%0.20%0.30%0.40%0.50%0.20%
Dec-160.30%0.80%0.80%2.80%0.30%0.10%-0.10%0.90%0.10%
Jan-170.40%0.70%0.20%2.90%0.40%0.40%0.70%0.20%0.20%
Feb-170.00%0.40%0.80%0.90%0.20%-0.30%-1.10%0.30%0.10%
Mar-170.20%0.20%0.60%-1.20%0.40%0.20%0.60%-1.00%0.10%
Apr-170.40%0.40%1.30%0.20%0.30%0.40%0.30%0.70%0.50%
May-170.00%-0.60%-0.90%-3.10%0.00%0.40%0.80%0.10%0.20%
Jun-170.00%0.00%0.40%-0.60%0.10%0.10%-0.30%0.30%0.20%
Jul-170.10%0.00%0.10%0.10%0.00%0.10%0.20%-0.30%0.10%
Aug-170.40%0.50%-0.50%2.90%0.20%0.30%0.50%0.40%0.10%
Sep-170.40%0.70%0.10%3.70%0.10%0.10%-0.10%0.90%0.20%
Oct-170.40%0.30%0.20%0.00%0.40%0.40%0.80%0.30%0.30%
Nov-170.40%0.70%0.20%3.40%0.30%0.20%-0.30%0.90%0.30%
Dec-170.00%0.20%-0.30%0.90%0.10%-0.20%-0.40%-0.60%0.10%
Jan-180.40%0.40%0.00%1.20%0.30%0.50%0.30%0.30%0.50%
Feb-180.30%0.40%-0.40%1.90%0.30%0.20%0.10%1.20%0.20%
Mar-180.30%0.20%1.90%-2.10%0.30%0.30%0.00%0.60%0.30%
Apr-180.10%0.10%-1.10%0.90%0.30%0.10%0.20%0.30%0.10%
May-180.40%0.60%0.30%2.20%0.20%0.30%0.50%0.50%0.20%
Jun-180.30%0.20%-1.30%1.20%0.30%0.40%0.70%0.90%0.30%
Jul-180.10%0.00%-0.10%-0.60%0.30%0.10%-0.30%0.40%0.30%
Aug-180.00%0.10%-0.30%0.40%0.20%0.00%-0.30%0.20%0.10%
Sep-180.10%0.10%-0.20%0.40%0.10%0.10%-0.30%1.10%0.30%
Oct-180.80%0.80%0.80%2.20%0.30%0.70%1.60%0.50%0.30%
Nov-18-0.20%-0.50%1.20%-4.40%0.20%0.10%0.10%0.70%0.00%
Dec-18-0.10%-0.80%1.90%-6.20%0.10%0.30%0.60%-0.20%0.10%
Jan-19-0.20%-0.60%-1.40%-3.50%0.20%0.00%-0.30%0.20%0.10%
Feb-190.30%0.50%-0.10%3.20%0.10%0.10%-0.10%-0.70%0.30%
Mar-190.30%0.80%0.30%3.90%0.10%0.20%0.30%-0.30%0.20%
Apr-190.50%0.50%0.00%3.30%0.00%0.50%0.80%0.50%0.30%
May-190.10%-0.30%-0.30%-1.50%0.00%0.30%-0.10%0.60%0.30%
Jun-19-0.10%-0.40%0.40%-3.20%-0.10%0.10%0.30%0.20%0.00%
Jul-190.20%0.20%0.10%0.60%0.20%0.20%0.10%0.30%0.20%
Aug-190.10%-0.30%-0.40%-1.10%-0.10%0.30%1.00%-0.20%0.20%
Sep-19-0.30%-0.20%0.30%-1.20%0.00%-0.30%-1.10%-0.50%0.00%
Oct-190.30%0.50%1.10%1.70%0.10%0.30%0.80%0.30%0.00%
Nov-19-0.20%0.30%1.40%0.10%0.10%-0.40%-1.30%-0.20%0.10%
Dec-190.30%0.10%-0.40%0.60%0.00%0.30%0.50%2.00%0.00%
Jan-200.30%0.30%0.20%0.40%0.30%0.40%0.30%-1.10%0.60%
Feb-20-0.50%-0.70%-1.70%-2.60%0.10%-0.50%-0.80%-0.40%-0.30%
Mar-20-0.50%-1.70%-0.10%-10.20%0.00%0.20%1.00%-3.20%0.10%
Apr-20-1.10%-2.80%-0.30%-17.30%-0.30%-0.40%1.10%-3.40%-0.80%
May-200.40%1.40%5.70%3.70%-0.10%0.10%-0.20%1.40%0.10%
Jun-200.30%0.40%-4.90%9.60%0.10%0.20%-0.10%1.30%0.30%
Jul-200.50%0.50%-0.90%4.10%0.30%0.50%0.90%-0.60%0.40%
Aug-200.20%0.40%-0.30%1.00%0.30%0.20%-0.10%-0.80%0.30%
Sep-200.30%0.40%1.70%-0.30%0.30%0.20%-0.30%0.60%0.40%
Oct-200.60%0.50%2.10%0.50%0.00%0.70%1.50%1.10%0.10%
Nov-200.00%0.40%0.20%1.70%0.30%-0.20%-0.70%-0.50%0.20%
Dec-200.30%0.90%-1.40%4.90%0.50%0.00%-0.70%-0.20%0.40%
Jan-211.20%1.60%1.60%5.10%0.80%1.00%0.80%0.70%1.20%
Feb-210.70%1.60%1.40%6.20%0.50%0.30%0.20%0.80%0.20%
Mar-210.80%1.50%0.60%5.00%0.80%0.30%0.20%1.40%0.40%
Apr-210.70%0.60%2.00%-2.00%0.90%0.70%1.10%2.70%0.30%
May-210.80%1.50%2.60%2.20%1.10%0.60%0.70%1.90%0.20%
Jun-211.00%1.20%0.80%2.10%1.00%0.80%2.10%0.90%0.30%
Jul-211.00%0.60%-2.10%2.60%1.00%1.10%1.70%2.70%0.60%
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