US macro data flow: November inflation and jobless claims

In the USA, headline CPI increased by 0.2% on a monthly basis and increased by 1.2% on an annual basis in November. On the core inflation side, where volatile items such as food and energy are excluded, there are 0.2% and 1.6% monthly and annual increases, respectively. Market expectations were 0.1% monthly and 1.1% annual increase in the headline CPI and 0.1% and 1.8% annual increase in the core CPI. It seems that the rate of increase in all items has spread to a wide base.

When we look at the sub items; The food index fell 0.1% in November, following a 0.2% increase in October. While the prices of the household food group in general are falling, the small increase in out-of-home food seems to offset this somewhat. The energy index rose in November as the increases in the natural gas and electricity indices more than offset the fall in the gasoline index. The energy index rose by 0.4% for the fourth consecutive increase in November. There is a 3.1% increase in natural gas and a 0.5% increase in electricity prices. Indexes for accommodation away from home, household items, entertainment, clothing, airline fares and motor vehicle insurance rose in November. Indexes for used cars and trucks, medical care and new vehicles all fell for the month.

When we look at the data from the view of FOMC's December guidance, it is not possible for the Fed to react unless the temporary momentum is maintained. With strong demand supporting new sales, November PMI data pointed to a significant increase in private sector sales prices. Therefore, the inflation rate increased in the middle of 4Q20. Policy makers will now consider 2% as the average rate in inflation, and the acceleration in demand must be continuous for such an increase in inflation. Even if financial incentives come in, the money cycle will not return to its former pace in an environment where there is no permanent income, because not all benefits will be spent and will replace the reduced savings. The rate of price increase will remain below the rate seen before the outbreak of the pandemic in the spring, forcing the Fed to move its cards towards expansion.

In the week ending December 5, the initial jobless claims figure was 853,000, up 137,000 from the previous week's revised level. The previous week's level was increased by 4,000, from 712,000 to 716,000. The 4-week moving average was 776,000, up 35,500 from the revised average of the previous week. Shutdowns due to Covid seem to re-increase application levels, and this is not a good signal for the employment market.

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