PPI Declined More Than Expected

Aside from last weekend’s suspended reciprocal tariffs between the U.S. and China, and Tuesday’s Consumer Price Index (CPI), this morning brings us the biggest bang for the buck in terms of grist for the economic mill. Just like every Thursday morning, this includes Weekly Jobless Claims. Not only that, but PPI, Retail Sales, Empire State and Philly Fed surveys, and key quarterly earnings reports have hit the tape this morning, as well.

As if all that isn’t enough, Fed Chair Jerome Powell is speaking at this hour, discussing the forthcoming update to its Framework Review. Here he fairly warns that the new review will reflect significant changes, as the Fed expects inflation to become more volatile in the months ahead. Powell also said the Fed is fully committed to its +2% inflation target… today. OK, so how about tomorrow?

Pre-market futures were down before any of this information was released, and we’re actually seeing an easing of levels in the red. The Dow was -185 points earlier but is now -150, the S&P 500 has improved from -31 points to -21, and the Nasdaq has moved from -144 points to -95 at this hour.

PPI -0.5% Headline: Lowest in 5 Years

You’d have to go back to the initial impact of the Covid era, in April of 2020, to find a lower Producer Price Index (PPI) headline than the -0.5% reported for last month. The previous month’s negative post, however, was revised up to 0.0%. Not exactly a wash, but less impactful on average for April wholesale price numbers. Core PPI month over month swung tremendously lower, from +0.3% reported a month ago to -0.4% today.

Year over year, PPI headline came in at the lowest level since September of last year: +2.4%, but off a 70 basis-point (bps) revision the prior month, from +2.7% to +3.4%. Core PPI year over year reached +3.1%, still higher than the other prints, but still down considerably from the big upward revision to +4.0% for March. Ex-food, energy and trade hit +2.9% this morning, 60 bps lower than the slightly upwardly revised +3.5% in the previous month. 

Look under the hood on this data a bit, and you’ll see that the biggest contraction on wholesale prices comes from trimmed margins. This may suggest — might even suggest strongly — that producers are eating some of the tariff increases in prices themselves currently. Although, you’ll see in the WMT earnings report below that not all the higher tariff costs will be eaten by the companies selling tariffed goods.

Retail Sales In-Line with Estimates: +0.1%

As expected, April Retail Sales came in much lower month over month, from an upward revision of +1.7% for March to +0.1% for April — in-line with estimates. Strip out expensive auto sales last month and we come in again at +0.1%, down from the upwardly revised +0.8% in the prior month. Ex-autos and gasoline, this number reaches +0.2%, way down from the +1.1% revision for March. The Control number, which gets fed up the economic food chain into different data accounts like PCE, came in negative today: -0.2%, from the revised +0.1% the previous month — the second-worst month of 2025 so far.

Weekly Jobless Claims Revert Back to the Norm: 229K, 1.81 Million

After a couple weeks of slight trepidation that Weekly Jobless Claims might be finally heading higher, we see levels firming once again beneath 230K on new claims, sub-1.9 million on longer-term. Headline Initial Jobless Claims were slightly above estimates at 229K, exactly where we were the previous week. Continuing Claims flowed up to 1.81 million from 1.87 million a week ago. This finely tuned metric on national employment levels remains well behaved.

Empire State, Philly Fed Both Report Modestly Negative

Also as expected, the May Empire State survey of productivity in New York State came in at -9.2, 20 bps below expectations and now the third-straight month in negative territory. This follows the unrevised -8.1 posted a month ago, and better than the -20 reported for the month of March.

The Philly Fed, also a regional manufacturing survey, reached -4 points on its May headline this morning, an improvement over the -10 anticipated. This follows a slightly improved revision to -26 for the prior month. This is only the second-straight month with a negative headline, but has been down in four of the past seven months.

Q1 Earnings at a Glance: WMT, BABA, DE

Walmart (WMT) outperformed estimates for its Q1 this morning, with earnings of 61 cents per share outpacing expectations by 4 cents, while revenues narrowly eked out a beat to $165.61 billion in the quarter. The biggest of the big-box retailers did say price hikes are coming, however, due to tariffs on Chinese imports. 

Chinese e-commerce giant Alibaba (BABA) reported mixed results this morning, posting a big +17% beat on earnings to $1.73 per ADS on U.S. dollar-equivalent $32.58 billion, which was slightly below the $33.08 billion in the Zacks consensus. The company did express concerns about overall demand.

Deere & Co. (DE) shares are up +5% in today’s pre-market after surpassing estimates on both top and bottom lines this morning: earnings of $6.64 per share also amounted to a +17% earnings beat, with revenues of $11.17 billion outpacing expectations by +4.9%. Shares are now up more than +20% year to date.

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This article originally published on Zacks Investment Research (zacks.com).

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