James Brodie
Head of Learning & Development, Flux
Chinese PPI, American Household Budgets Pose Risk to Consumer Spending
Nasdaq and silver surge as dollar weakens; inflation rises, gas prices bite, sentiment sinks despite strong payroll headline
Nasdaq jumped 2.4% on Friday and silver jumped 10% over 3 days as the dollar continues to trend lower.
Chinese PPI jumps from -0.7% MoM to +0.3% MoM, way above estimates of -0.1%. And +1.2% YoY, (est. +0.8%). Inflation is back.
Positive vibes of US payrolls data didn’t match the latest sullen read of consumer sentiment by the University of Michigan. The gauge fell in recent weeks to a record low on growing concerns about the impact of inflation on personal finances and buying conditions.
Confidence continues to languish as Americans’ anxiety about the overall cost of living is compounded by sharply higher prices at the gas pump. The strain on household budgets poses a risk to consumer spending, a primary engine for the economy. Gasoline prices breached $4.50 a gallon on average this week for the first time since July 2022, American Automobile Association data show. They’re up more than 50% since the start of the Iran war.
US payrolls doubled expectations with 115,000 jobs created in April, with the unemployment rate holding at 4.3%. The beat is real but slightly hollow. Nearly all of the upside versus consensus came from part-time jobs - full-time employment actually fell in April. That matters for interpreting the demand signal; it suggests employers are cautious about permanent headcount even while adding bodies.
The survey divergence is the most technically interesting detail. The Establishment survey (which produces the 115K headline) is running significantly hotter than the Household survery.
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