US DATA: Small Businesses Increasingly Planning To Raise Prices
Jun-10 11:46
Price components in today’s NFIB small business survey reinforce a view that May CPI – released tomorrow – might not see stronger tariff-driven inflation until the summer months. Whilst actual price changes held steady back close to their 2024 average, the breadth of planned price increases tilted higher again for the highest in just over a year even if it's still markedly lower than the surge in 2021/22.
- The NFIB small business survey was stronger than expected in May at 98.8 (cons 96.0) after 95.8 in April, at what had been its lowest since Oct 2024.
- Whilst off a high of 105.1 in December ahead of Trump’s inauguration in January, it’s still elevated compared to levels through most of 2022-24 when it averaged closer to 90.
- We touched on the already known job components here, which included a notable cooling in wage growth metrics.
- Back to today’s new price setting information, the net share of firms who actually increased prices compared to three months ago held at 25% in May for a second month. It extends a pullback from a recent high of 32% in Feb (highest since May 2023) having returned almost to the 23.4% averaged in 2024 prior to US tariff announcements. It’s still high by pre-pandemic standards though, having averaged 11.5% through 2017-19.
- However, the share expecting to raise prices over the next three months resumed its increase to 31%, above the 30% in March for its highest since Mar 2024. It averaged 27.7% in 2024 and 22.3% in 2017-19.
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MACRO OUTLOOK: US PPI/Retail Sales And Powell Follow On Thursday [2/2]
May-09 20:17
- Core PCE implications will then be watched closely in Thursday’s PPI report, and we expect with additional focus on portfolio management after last month’s huge upward revision to February.
- Retail sales, whilst only reported in nominal terms, will offer a keenly awaited look at consumer behavior.
- Real spending moderated to 1.8% annualized in Q1 after 4.0% in Q4 despite likely tariff front-running, with April a good test of how much discretionary spending was pulled forward.
- Finally, Powell provides “Opening Remarks” at the Second Thomas Laubach Research Conference, although he’s allotted twenty minutes so there is scope for more substantive remarks than you’d usually expect. His message at Wednesday’s FOMC press conference was one firmly of being in no hurry to cut rates amidst huge uncertainty. He also appeared to put more weight on hard data over soft indicators that appear more stagflationary in nature.
MACRO OUTLOOK: US CPI Offers Look At April Tariff Distortions on Tuesday [1/2]
May-09 20:15
- The week’s US data calendar is highlighted by CPI inflation on Tuesday although PPI inflation and retail sales reports on Thursday are in close second. All three releases are going to be important, offering further hard data for April in the first month under reciprocal tariffs. What’s more, PPI and retail sales are followed by Fed Chair Powell just ten minutes after their release (more on that below).
- Core CPI inflation is seen accelerating to 0.3% M/M in April, with six unrounded estimates we’ve seen to date averaging 0.27% M/M.
- A potential for a ‘low’ 0.3% aside, it’s still likely a swift acceleration from a particularly soft 0.06% M/M in March which was in large part down to surprisingly abrupt declines in lodging away from home (-3.5%) and airfare (-5.3%) prices.
- This lodging weakness carried over to core PCE inflation back in March, at just 0.03% M/M after a particularly strong 0.50% M/M in February in a large wedge with core CPI at 0.23% M/M.
- Markets currently price a next Fed cut with the September FOMC meeting.
USDCAD TECHS: Pressuring Resistance
May-09 20:00
- RES 4: 1.4296 High Apr 7
- RES 3: 1.4111 High Apr 4
- RES 2: 1.4041 50-day EMA
- RES 1: 1.3943 High May 9
- PRICE: 1.3930 @ 16:06 BST May 9
- SUP 1: 1.3751 Low May 6
- SUP 2: 1.3744 76.4% retracement of Sep 25 ‘24 - Feb 3 bull run
- SUP 3: 1.3696 Low Oct 10 2024
- SUP 4: 1.3643 Low Oct 9 ‘24
USDCAD has recovered from its recent lows. Despite the recovery, the trend condition remains bearish and short-term gains are considered corrective. A fresh cycle low on Tuesday reinforces the bearish theme. Potential is seen for a move towards 1.3744, a Fibonacci retracement. Note that moving average studies are in a bear mode position, highlighting a dominant downtrend. Key resistance is seen at 1.4041, the 50-day EMA.
