Consumer and producer prices were higher in April, largely from increased energy costs, but the bigger storyline is that inflation remains quite modest overall. The moderation of pricing pressures has provided some flexibility to the Federal Reserve, allowing it to pause on future rate hikes until incoming data suggest further actions are warranted.
Over the past 12 months, producer prices for final demand goods and services have risen 2.3 percent. Despite the uptick in the latest data, overall inflationary pressures continue to suggest some stabilization from last year, when rising input prices posed a major challenge for manufacturers. Indeed, raw material costs have decelerated since peaking at 3.1 percent year-over-year in September.
The data were similar for the consumer price index, with inflation rising 2.0 percent year-over-year. That is down from 2.9 percent in July, the highest year-over-year rate since February 2012, reflecting an overall deceleration in consumer price growth since mid-2018.
There were 476,000 manufacturing job openings in March, with durable goods job postings at an 18-year high. Over the past 12 months, job openings have averaged more than 475,000 per month--a highly elevated pace even as this rate has pulled back from the all-time highs in August and December (501,000). This echoes concerns seen elsewhere about the difficulties in finding talent in the tight labor market.
Meanwhile, there were 7,488,000 nonfarm job openings in March, just shy of the all-time high in January (7,625,000). In addition, there continued to be more job openings in the U.S. economy than the number of people looking for work for the 13th straight month--a gap of nearly 1.3 million in the latest data.
The U.S. trade deficit edged slightly higher in March. Goods exports had the best reading since June 2018, but that was offset by higher goods imports. Meanwhile, U.S.-manufactured goods exports were essentially unchanged in the first quarter of 2019 relative to the same time period in 2018, using non-seasonally adjusted data.
On the topic of trade, the United States increased the supplemental tariffs on $200 billion worth of Chinese goods, from 10 percent to 25 percent, on Friday as negotiators failed to reach an agreement that might have prevented that action. While trade talks with China will continue, higher tariffs, the threat of additional Chinese retaliatory actions and additional U.S. tariffs will lead to increased uncertainty in the marketplace. Financial markets have already reflected such anxieties.
NAM President and CEO Jay Timmons noted that this should accelerate negotiations for a bilateral, enforceable trade deal. He added, "A trade war will not solve our problems. So we look forward to the United States and China returning to the negotiating table to get this deal done as soon as possible."