Higher Inflation
- Barry B
- Sep 3
- 1 min read
Overview
This week’s data painted a mixed picture. Inflation firmed slightly while labor-market signals softened. Mortgage rates barely moved and remain near the lowest levels of the year.
Inflation: Core PCE Moves Up
Core PCE, the Fed’s preferred inflation gauge, rose 2.9% year over year in July, roughly in line with expectations. That’s up from 2.8% in June and the highest reading since February. Closing the gap to the 2% goal remains gradual and hasn’t been seen since early 2021.Looking ahead, higher tariffs could add modest upward pressure to prices.
Labor Market: Openings Continue to Cool
July JOLTS showed 7.2 million job openings (vs 7.4 million expected), the lowest since December 2020.Fewer postings suggest less wage pressure as firms can hire without bidding up pay. Companies remain reluctant to lay off workers, but hiring has slowed.
Manufacturing: Slight Improvement, Still Contractionary
The ISM Manufacturing Index rose to 48.7, a touch above consensus.Sub-50 readings indicate contraction—July marked the sixth straight month below that line. Over time, tariff policy could provide a modest tailwind to some domestic producers.
Week Ahead
Sept. 4 - U.S. International Trade in Goods & Services; ISM Services Index
Sept. 5 - Employment Report
Sept. 11 - Consumer Price Index (CPI)
Fun Fact: PCE and CPI both track inflation, but PCE covers a broader set of spending and adjusts for how consumers substitute between goods—one reason the Fed prefers it.
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