There were two important reports on the U.S. economy released this morning. First, household inflation pressures in America continued to firm last month, according to new data from the Bureau of Labor Statistics (BLS). Specifically, the consumer price index (CPI) for all urban consumers rose by 0.2 percent in February, in line with expectations. Core CPI, which excludes the volatile food and energy components, also lifted by 0.2 percent last month. The rise in consumer prices occurred across many categories in February, with notable gains in the costs of motor vehicle insurance and apparel. On a year-over-year basis, though, core CPI lifted by just 1.8 percent last month. That was a smaller annual increase than forecast and below the Federal Reserve’s 2.0 percent “target.” Altogether, the latest CPI report signals that inflation pressures in America, at least for now, continue to gradually pick up without any sharp acceleration that will force monetary policymakers to hike rates more quickly. More clarity on how officials view current inflation trends will be provided at next week’s Federal Open Market Committee (FOMC) meeting.
Elsewhere, small business owner confidence firmed last month, according to a new report from the National Federation of Independent Business (NFIB). Specifically, the headline optimism index rose to 107.6 in February, a larger gain than expected and the 2nd-highest reading in the 45-year history of the NFIB surveys. Under the hood, six of the ten main components that make up the sentiment gauge improved last month, with continued strength seen in surveyed owners’ outlooks for both sales growth and the overall economy. Job creation also remained historically strong in February, as more than half of small businesses reported that they are hiring. However, 47 percent of surveyed owners complained about there being few or no qualified applicants for open positions. That is actually down slightly from January and perhaps a reflection of reported compensation increases holding at the highest level since 2000. Regardless, filling vacancies remains a major challenge for many small businesses, and quality of labor is once again the top-cited problem facing owners. NFIB chief economist William C. Dunkelberg added that “Hiring is excellent and would be stronger if the labor market were not so tight. This is and will be a major constraint on growth.”
Sources: Econoday, U.S. DoL, NFIB, ZH, Bloomberg, FRBSLPost author: Charles Couch