MNI DATA ANALYSIS: July PPI -0.1%, Ex Food, Energy -0.1%>

--July PPI Ex. Food, Energy, Trade Flat; Trade Services -0.5%

--PPI +1.9% Y/Y In July Vs +2.0% In June; Ex Food, Energy +1.8% Vs +1.9% 

--Initial Claims +3,000 To 244,000 In August 5 Week; 4-Wk Avg -1,000

By Kevin Kastner, Sara Haire and Holly Stokes

     WASHINGTON (MNI) - Final demand PPI fell 0.1% in July, both 

including and excluding food and energy prices, compared with 

expectations for 0.2% gains for both, data released Thursday by the 

Bureau of Labor Statistics showed. 

     The core rate the BLS prefers, excluding changes in volatile profit 

margins as well as food and energy, was flat in July. Trade services 

prices themselves fell 0.5% in the month, while overall services were 

down 0.2%. 

     The year/year rates for these measures indicated deceleration. 

Overall PPI was up 1.9% year/year in July after a 2.0% year/year rise in 

June. At the same time, the year/year rate for PPI excluding food and 

energy slowed to 1.8% from 1.9% in June and the year/year rate for PPI 

excluding food, energy and trade services fell to 1.9% from 2.0% in the 

previous month. 

     Overall, the data points to weak wholesale inflation that should 

spill over into consumer prices on a monthly basis, and a pull back in 

y/y inflation that weigh into the FOMC's inflation discussion. 

     The softer-than-expected reading for July was not due to just a few 

factors. Rather, the declines were "broad-based" BLS senior analyst 

Scott Sager told Market News International during the data "lockup" 

prior to publication. 

     Sager told MNI that declines can be found across both goods and 

services and even lead back through the intermediate categories. 

     Energy prices fell 0.3% in July, led by declines for residential 

fuels, gasoline, and natural gas prices. Food prices were flat in the 

month, though prices of beef and vegetables declined. 

     Within the core measures, there were declines for passenger cars 

and light trucks, but services gains for hospital care and legal 

services. 

     Data released at the same time showed that initial claims for U.S. 

state unemployment benefits rose by 3,000 to 244,000 in the August 5 

week, compared with expectations for a 240,000 level. There was a small 

upward revision to the claims level in the previous week. 

     The data from the Labor Department showed that the four-week moving 

average for initial claims, a better measure of the underlying trend of 

the data, fell by 1,000 to 241,000 in the August 5 week. 

     If the number of headline claims does not change next week and 

there are no revisions to data from the past four weeks, the four-week 

average will rise by 2,500 as the 234,000 level in the July 15 week 

rolls out of the calculation. 

     Seasonal adjustment factors had expected an increase of 5.1%, or 

10,107 in unadjusted claims in the week. Instead, unadjusted claims rose 

by 12,957 to 211,733. The current week's level was still well below the 

231,542 level in the comparable week a year ago. 

     The level of continuing claims fell by 16,000 to 1.951 million in 

the July 29 week, while the four-week moving average for continuing 

claims rose by only 500 to 1.965 million. 

     The seasonally adjusted insured unemployment rate held steady at 

1.4% in the July 29 week for the 17th straight week. The current week's 

rate is down from 1.6% in the same week a year earlier. 

     ** MNI Washington Bureau: 202-371-2121 ** 

[TOPICS: MAUDS$,M$U$$$,MT$$$$,MAUDR$]