PNC economists provide insight into key indicators that may have an impact on current business performance and the path ahead.

Consumer Price Index (CPI)

  • Consumer Price Index (CPI) inflation came in at +0.4% in March 2024 versus February on a seasonally adjusted basis. This translates to a 3.5% gain versus one year ago, continuing the trend higher that has marked the early months of 2024.
  • Core CPI inflation also rose by +0.4% for the month and remains stubbornly set at just under 4% on a year-ago basis (+3.8%). The Fed’s targeted average of 2.0% year-over-year inflation remains well off from March’s core inflation result, undermining arguments in favor of more urgent Federal Reserve easing.
  • PNC is forecasting three rate cuts this year, in June, September, and December. But the March 2024 CPI inflation reading adds to mounting data evidence suggesting this outlook may be too optimistic with respect to lower interest rates this year. 

Producer Price Index (PPI)

  • Topline Producer Price Index (PPI) inflation gained 0.2% on a seasonally adjusted basis in March 2024, representing a third consecutive month of gains after falling throughout the final quarter of last year. Core PPI inflation, which excludes volatile costs for food and energy prices, was also up by 0.2%.
  • Prices in final demand for goods producers retreated into negative territory in March 2024, posting a decline of 0.1% for the month. After February’s spike of +1.2%, however, goods prices are now up by 0.9% versus March 2023. While that gain is not worrisome in and of itself, it does represent a turnaround from most of the second half of 2023, when prices were down by 1%.
  • March 2024 saw another 0.3% gain in services PPI versus the month prior – translating to a 3.4% annualized pace. The services category has seen price growth accelerate in the three months to start this year after trending all the way to a below 2% annualized pace from September through December 2023. Producer prices are not yet flashing red, but with oil prices on the rise and strong wage growth continuing across the U.S. economy, concern is warranted regarding the potential for business costs passing through to consumers by way of higher prices.

Jobs Growth

  • The U.S. labor market remains very strong, with job growth of 303,000 in March according to a survey of employers from the Bureau of Labor Statistics – well above consensus expectations of around 200,000. Over the past three months, the U.S. economy has added 276,000 jobs on average, far above the pre-pandemic pace of around 165,000.
  • The unemployment rate fell to 3.8% in March from 3.9% in February. The unemployment rate has now been below 4% for 26 straight months, the longest such stretch since the late 1960s. The labor force participation rate (the share of adults working or looking for work) rose to 62.7% in March from 62.5% in February. The labor force participation rate was consistently above 63% prior to the pandemic.
  • Average hourly earnings rose 0.3% in March from February; this followed wage gains of 0.2% in February (revised higher from 0.1%) and 0.5% in January. Average hourly earnings were up 4.1% in March from one year earlier, down from 4.3% in February, 4.4% in January, and almost 6% in early 2022. Slowing wage growth will support a further easing in inflation in 2024.

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