The producer price index increased 0.4%, the most in five months and twice the gain in July, according to Labor Department figures released this morning. Excluding the food and energy components the core index rose 0.3%, higher than the 0.1% forecast.
Initial jobless claims dropped by 3000 last week to 450,000, lower than the forecast of 459,000. While the pace of staff reductions has slowed, it is job creation that is needed to get the economy out of its slump.
Interestingly both stock and bond markets are reacting negatively to this morning’s data. U.S. stock indices are slightly lower; however, bonds are taking a beating with the yield on the 10 year note climbing back to 2.77%. This is on top of Wednesday’s drubbing, which has mortgage prices worse .50% to .625% from early Wednesday postings.
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