According to our analysis USDJPY moved 17 pips and US 500 moved 10 points on US BLS Producer Price Index (PPI), US Retail Sales, US Jobless Claims and Philly Fed Manufacturing data on 15 May 2025.
USDJPY (17 pips)
US500 (10 points)
Charts are exported from JForex (Dukascopy).
Inflation Cools While Consumers Keep Spending: A Look at April 2025’s Economic Pulse
May 16, 2025 | By Economic Insights Blog Team
The economic landscape this spring reveals a nuanced picture: while inflation pressures at the production level are softening, consumer demand remains resilient. Let’s break down the key takeaways from the latest government data on producer prices, retail sales, unemployment claims, and manufacturing activity.
Producer Price Index (PPI): April Brings a Rare Drop
According to the Bureau of Labor Statistics, the Producer Price Index (PPI) for final demand fell 0.5% in April, a sharp contrast to March’s flat reading. This is the largest drop since October 2023.
Services led the decline, dropping 0.7%, primarily due to falling trade margins — notably in machinery and vehicle wholesaling, which saw a steep 6.1% fall.
Final demand goods prices were flat overall. However:
Core goods (excluding food and energy) rose 0.4%.
Food prices dropped 1.0%, while energy prices dipped 0.4%.
Chicken eggs saw a dramatic 39.4% plunge.
12-month change: Final demand prices are still up 2.4% annually, suggesting inflation is moderating but not gone. Core PPI (less food, energy, and trade) rose 2.9% year-over-year.
Retail Sales: Consumers Show Modest Growth
The Census Bureau reports that retail and food services sales in April grew by 0.1%, following an upward revision to 1.7% growth in March. While modest, this marks 5.2% year-over-year growth — a sign that consumers are still opening their wallets.
Retail trade edged down 0.1%, but:
Motor vehicle & parts dealers surged 9.4% over last year.
Food services and drinking places rose 7.8% year-over-year, showing strength in discretionary spending.
Unemployment Claims: Steady, but Slight Uptick in Trend
Unemployment insurance claims held steady:
Initial claims: 229,000 (unchanged from prior week).
4-week moving average: 230,500 (slight rise).
Insured unemployment rate: 1.2% — unchanged, signaling labor market stability.
Notably:
Michigan saw a spike in initial claims (+6,869), mostly from manufacturing layoffs.
New York saw a large drop (-15,228), thanks to fewer layoffs across education, transport, food services, and government.
Philadelphia Fed Manufacturing Survey: Weak But Hopeful
The Philadelphia Fed’s May Manufacturing Business Outlook Survey shows that current activity remains weak, but optimism is rising:
General activity index: Improved to -4.0 from -26.4, still negative but recovering.
New orders jumped into positive territory at 7.5, while shipments dropped further to -13.0.
Employment index rose significantly to 16.5, and workweek hours ticked up.
Price pressures remain strong: Prices paid surged to 59.8, and prices received rose to 43.6 — both the highest since June 2022.
Future outlook? Brightening:
Future general activity index spiked to 47.2, with new orders and shipments also showing strong expected growth.
Businesses now expect 3.8% inflation for consumers and are preparing for higher compensation costs and competitive price increases in the near term.
What It All Means
The April data gives mixed but mostly encouraging signals:
Disinflation is real at the producer level, particularly in services and food.
Consumers are still spending, albeit more cautiously than earlier in the year.
Labor markets are steady, even amid isolated layoffs.
Manufacturers are hopeful, though current conditions remain sluggish.
Bottom Line: The U.S. economy in April 2025 is treading a fine line — inflation is cooling without crushing consumer demand or jobs. But manufacturers and retailers are watching input costs and pricing power carefully. The months ahead will test whether this delicate balance holds.
Next Key Releases to Watch:
May PPI: June 12
May Jobs Report: June 6
FOMC Meeting: June 18–19
Stay tuned for deeper dives and analysis right here at Economic Insights.
Disclaimer: This blog post is for informational purposes only and should not be construed as financial advice. Always conduct thorough research and consider seeking advice from a financial professional before making any investment decisions.
Source: https://www.bls.gov/news.release/ppi.nr0.htm, https://www.census.gov/retail/sales.html, https://www.dol.gov/ui/data.pdf, https://www.philadelphiafed.org/-/media/FRBP/Assets/Surveys-And-Data/MBOS/2025/bos0525.pdf
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