Latest lot of US data seem to point to inflation ... would not like to be the Fed at the moment, amidst intense political presure to cut rates.

United States Producer Price Inflation MoM - July 2025

• US producer prices rose 0.9% mom in July 2025, rebounding from a flat reading in June and much higher than expectations of 0.2%. 
• It is the biggest increase in producer prices since June 2022. 
• Cost of services went up 1.1%, led by a 3.8% surge in margins for machinery and equipment wholesaling. 
• Cost also increased for portfolio management; securities brokerage, dealing, investment advice; traveler accommodation services; automobiles retailing; and truck transportation of freight. 
• Prices of goods increased 0.7%, led by a 38.9% jump in fresh and dry vegetables. Prices also went up for meats, diesel fuel, jet fuel, nonferrous scrap, and eggs. Conversely, gasoline decreased 1.8%. 
• Meanwhile, core PPI, which excludes food and energy, also went up 0.9%, compared to forecasts of 0.2%. 
• Year-on-year, headline producer inflation accelerated to a five-month high of 3.3% and above expectations of 2.5%. Annual core producer inflation jumped to 3.7% from 2.6%, higher than estimates of 2.9%

United States Producer Prices Final Demand Less Foods and Energy YoY

• Core producer prices in the US increased 3.7% year-on-year in July 2025, the highest reading in four months, compared to 2.6% in June and above forecasts of 2.9%. 
• Core Producer Prices YoY in the United States averaged 2.64 percent from 2011 until 2025, reaching an all time high of 9.70 percent in March of 2022 and a record low of 0.20 percent in October of 2015

US Core Inflation Rate July 2025

• The annual core consumer price inflation rate in the United States, which excludes volatile items like food and energy, rose to 3.1% in July 2025, the steepest in five months, from 2.9% in June and above market forecasts of 3%. 
• The heavyweight shelter index increased 3.7% over the last year, following a 3.8% rise previously. 
• Other indexes with notable increases over the last year include medical care (+3.5%), household furnishings and operations (+3.4%), motor vehicle insurance (+5.3%), and recreation (+2.4%). 
• On a monthly basis, core consumer prices rose by 0.3% in July, following the 0.2% increase in June and matching market estimates.

US Inflation Rate - July 2025

• The US annual inflation rate remained at 2.7% in in July 2025, the same as in June and below forecasts of 2.8%. 
• Price pressures increased for used cars and trucks (4.8% vs 2.8% in June), transportation services (3.5% vs 3.4%) and new vehicles (0.4% vs 0.2%) while inflation steadied for food (2.9% vs 2.9%). 
• On the other hand, inflation slowed slightly for shelter (3.7% vs 3.8%) and energy cost declined more (-1.6% vs -0.8%). 
• Prices for gasoline (-9.5% vs -8.3%) and fuel oil (-2.9% vs -4.7%) continued to decrease while the rise for natural gas prices remained elevated (13.8% vs 14.2%).
• On a monthly basis, the CPI rose 0.2%, just below June’s 0.3% gain which was the strongest since January and matching expectations. 
• Meanwhile, core inflation, which excludes food and energy, accelerated to a five-month high of 3.1%, compared to 2.9% in June and above forecasts of 3%. The monthly core CPI went up 0.3% as expected, its sharpest rise in six months, after 0.2% previously

Digested and summarised the economic data and comentary coming out of the US this week from Trading Economics. A rather nasty set of results this week as GDP is "up", but Employment numbers don’t look good, inflation is ticking up, consumer spending was flat and Manufacturing continues to slowdown. And this is before REAL Tariff impacts kick in .... 

The USD tumbled. USD30Y and USD10Y yields have fallen.

US economic statistics just got politicised with the firing of the BLS Commissioner which could render future labour statistics useless similar to Chinese labour figures. Extraordinary.

Time to buckle up the seatbelts again it would seem ...

Positives

• US GDP Growth rate rebounded from -0.5% in 1Q to 3.0% in 2Q, primarily from a recovery of imports which plunged in 1Q
• US July ADP Employment - added 104k jobs

Negatives

• US June Job Openings fell 275k
• US July Unemployment Rate rose 0.1% to 4.2%
• US July Non-Farm Payrolls tanked - July rise was only 73k (vs 110k expected), but sharp revision to May and June, combined 285k lower than reported 
• US June Core PCE Index rose 0.3% MoM, annualised 2.8% - inflation could be taking root as tariffs continue to kick in
• US July Manufacturing PMI - fell 1 point from 49 to 48, in contraction territory as manufacturing continues to slowdown 
• US June Personal Spending - flat up 0.1% after adjusting for inflation

US GDP GROWTH RATE - UP

• The US economy grew an annualized 3% in Q2 2025, rebounding from a 0.5% contraction in Q1, and beating expectations of a 2.4% rise, according to the advance estimate. 
• The expansion primarily reflected a 30.3% plunge in imports, following a 37.9% surge in Q1, when businesses and consumers rushed to stockpile goods ahead of expected price increases following a series of tariff announcements. 
• Consumer spending rose at a faster pace (1.4% vs 0.5% in Q1), led by goods (2.2% vs 0.1%), though it marked the tamest growth in consecutive quarters since the covid pandemic. 
• Government expenditure rebounded (0.4% vs -0.6%). 
• Fixed investment slowed (0.4% vs 7.6%), with contractions in investment for structures (-10.3% vs -2.4%) and residential (-4.6% vs -1.3%) and a slowdown seen for equipment (4.8% vs 23.7%). 
• Exports were down 1.8%, the biggest decline since Q2 2023, compared to a 0.4% rise in Q1. Private inventories cut 3.17 percentage points from the growth.

US JOB OPENINGS - DOWN

• The number of job openings in the US fell by 275,000 to 7.437 million in June 2025, below market expectations of 7.55 million. 
• The number of job openings decreased in accommodation and food services (-308,000), health care and social assistance (-244,000), and finance and insurance (-142,000). 
• The number of job openings increased in retail trade (+190,000), information (+67,000), and state and local government education (+61,000). 
• Regarding regional distribution, job openings fell in the Northeast (-106,000), the South (-130,000), and the Midwest (-149,000). 
• Meanwhile, hires and total separations were little changed at 5.2 million and 5.1 million, respectively. Within separations, quits (3.1 million) were little changed while layoffs and discharges (1.6 million) were unchanged

US UNEMPLOYMENT RATE - UP, STRESS ON EMPLOYMENT

• The US unemployment rate rose slightly to 4.2% in July 2025 from 4.1% in June, aligning with market expectations. 
• The number of unemployed increased by 221,000 to 7.236 million, while employment fell by 260,000 to 163.106 million. 
• The labor force contracted by 38,000 to 170.342 million. 
• The labor force participation rate dipped by 0.1 percentage points to 62.2%—its lowest level since November 2022—while the employment-population ratio also declined by 0.1 points to 59.6%, the weakest since December 2021. 
• The broader U-6 unemployment rate, which includes discouraged workers and those working part-time for economic reasons, rose to 7.9% from 7.7% in June

US NON-FARM PAYROLLS - DOWN, STRESS ON EMPLOYMENT

• US nonfarm payrolls rose by 73K in July 2025, well below expectations of 110K. 
• The June figure was sharply revised down from an initial 147K to just 14K, while May's reading was also cut by 125K. Taken together, these revisions show that employment in May and June was 258K lower than previously reported - suggesting the labor market may be cooling more rapidly than initially anticipated. 
• In July, employment continued to trend up in health care (55K), led by ambulatory health care services (34K) and hospitals (16K). Job gains also happened in social assistance (18K). Employment showed little change over the month in other major industries, including mining; construction; manufacturing; wholesale trade; retail trade; transportation and warehousing; information; financial activities; professional and business services; leisure and hospitality. 
• On the other hand, federal government employment continued to decline in July (-12K) and is down by 84K since reaching a peak in January

US ADP EMPLOYMENT CHANGE - UP, POSITIVE EMPLOYMENT

• Private businesses in the United States added 104,000 jobs in July 2025, the strongest gain since March and well above market expectations of a 75,000 increase. 
• The report followed a downwardly revised loss of 23,000 jobs in June, signaling a rebound in labor market momentum. 
• The service-providing sector contributed 74,000 jobs, led by strong gains in leisure and hospitality (+46,000), financial activities (+28,000), and trade, transportation, and utilities (+18,000). 
• However, education and health services posted a sharp decline, shedding 38,000 jobs. 
• Meanwhile, the goods-producing sector added 31,000 jobs, supported by growth in construction (+15,000), natural resources and mining (+9,000), and manufacturing (+7,000). 
• The survey also showed that year-over-year pay growth remained solid in July, at 4.4% for job-stayers and 7.0% for job-changers - unchanged for the fourth consecutive month

US CORE PCE PRICE INDEX MOM - UP, INFLATION

• The core PCE price index in the US, which excludes volatile and energy prices and is Federal Reserve's chosen gauge of underlying inflation in the US economy, went up 0.3% from the previous month in June of 2025. 
• It was the biggest rise in four months, in line with market expectations. From the previous year, the index rose by 2.8%, above expectations of 2.7%

US ISM MANUFACTURING PMI - DOWN, MANUFACTURING SLOWDOWN

• The ISM Manufacturing PMI fell to 48 in July 2025 from 49 in June, missing expectations for an increase to 49.5. 
• The reading marked the fifth consecutive month of contraction in the manufacturing sector and was the weakest since October of last year. 
• The largest negative contributions came from declines in supplier deliveries (45.7 vs. 46.7) and employment (43.4 vs. 45.0). "The Employment Index dropped further into contraction as panelists indicated that managing head count is still the norm at their companies, as opposed to hiring. The mixed indicators in output suggest companies still being cautious in their hiring even with an increase in production”, Susan Spence, chair of the ISM Manufacturing Business Survey Committee, said. On the positive side, production accelerated (51.4 vs. 50.3), while the declines in new orders (47.1 vs. 46.4) and the backlog of orders (46.8 vs. 44.3) moderated. Price pressures also eased, with the prices index falling to 64.8 from 69.7

US PERSONAL SPENDING - FLAT

• Personal spending in the US increased 0.3% month-over-month in June 2025, rebounding from a flat reading in May but slightly below forecasts of 0.4%. 
• It mostly reflected a recovery in spending on goods (0.5% vs -0.7% in May), namely nondurable goods (0.7% vs -0.2%). Spending on durable goods flattened (0% vs -1.7%). 
• Meanwhile, outlays for services rose 0.3%, the same as in May, indicating weak discretionary spending. 
• Adjusted for inflation, consumer spending advanced a meagre 0.1%, after a 0.2% fall in the previous month