Producer price index November 2024:

A measure of wholesale prices rose more than expected in November, adding fuel to the belief that progress in reducing inflation has slowed, the Bureau of Labor Statistics reported Thursday.

The producer price indexwhich measures what producers get for their products in the final demand stage, rose 0.4% for the month, more than the Dow Jones consensus estimate of 0.2%. On an annual basis, the PPI rose 3%, the biggest advance since February 2023.

However, excluding food and energy, core PPI rose 0.2%, meeting the forecast. In addition, subtracting commercial services left the increase in the PPI at only 0.1%. The 3.5% year-on-year increase was also the biggest since February 2023.

In other economic news Thursday, the the Department of Labor reported that first-time jobless claims rose to a seasonally adjusted 242,000 for the week ended Dec. 7, well above the forecast of 220,000 and up 17,000 from the previous period.

On inflation, the news was mixed.

Prices of final demand goods increased by 0.7% in the month. the biggest move since February this year. About 80% of the move came from a 3.1% increase in food prices, according to the BLS.

Within the food category, chicken eggs rose 54.6%, adding to a widespread acceleration in items such as dried vegetables, fresh fruit and poultry. Retail egg prices rose 8.2% for the month and were up 37.5% from a year ago, the BLS said in a separate consumer price report on Wednesday.

Services costs rose 0.2%, driven by a 0.8% increase in trade.

The PPI release comes a day after the BLS reported that the consumer price indexa more widely cited gauge of inflation, also rose in November to 2.7% over 12 months and 0.3% month-on-month.

Despite the seemingly stubborn state of inflation, markets overwhelmingly expect the Federal Reserve to cut its one-day interest rate next week. Traders in futures markets are implying a cut of nearly a quarter of a percentage point when the rate-setting Federal Open Market Committee concludes its meeting on Wednesday.

The Fed uses the Department of Commerce price index of personal consumption expenses as the main inflation indicator and forecasting tool. However, the CPI and PPI data feed into this measure.

An Follower of the Atlanta Fed puts November PCE at 2.6%, up 0.3 percentage points from October, and core PCE at 3%, up 0.2 percentage points. The Fed targets 2% inflation and generally sees the core as a better long-term indicator. Projections have not been updated to include the PPI release.

Stock market futures they were slightly in negative territory after the economic news. Treasury yields were mixed while the odds of a rate cut by the next week they were still around 98%, according to the CME Group.

One reason markets expect the Fed to cut, even amid stubborn inflation, is that Fed officials are increasingly worried about the labor market. Nonfarm payrolls have posted gains every month since December 2020, but gains have slowed recently, and there was news Thursday that layoffs could increase as unemployment lasts longer.

Jobless claims hit their highest level since early October, while ongoing claims, which are a week late, rose to 1.89 million. The four-week moving average of rolling claims, which smooths out weekly volatility, hit its highest level in just over four years.