Today’s Economic Shakers

Inflation hits Fed target while US consumer spending slows…

The chances of the Federal Reserve bank raising interest rates up to 3 more times before the end of the year increased as the latest Commerce Department data showed that inflation hit the central bank’s target for the first time in over four years.

February’s data from the Federal agency showed that consumer spending in the US rose by 0.1%, which was below January’s gain of 0.2%.

The small rise in spending came in below analyst estimates, which had pegged an increase of 0.2%, according to a recent poll conducted by Bloomberg.

The Commerce Department data also showed that a key price gauge used by the Fed to track inflation rose above its target of 2%, which marked the first time the central bank hit that goal since 2012.

Based on the government data released this morning, inflation had risen to 2.1% in February.

With the unemployment rate already under the Fed’s goal of 5%, the 2% rate of inflation now has given the Fed its target goals for both key economic metrics that fall under its dual mandate.

That, in turn, supports the Fed's narrative of a healthy economy that warrants additional rate hikes.

The data also showed that income rose last month, gaining 0.4%, as opposed to a 0.5% gain from the previous month.

Perhaps even more encouraging for the economy was February’s gain in wages, which rose by 0.5%. That increase was the biggest jump since October 2016.

Also included in the morning report from the Commerce Department was February’s core price measure, which rose 0.2% as compared to January.

The core price measure is regarded as a less volatile metric, as it excludes food and fuel.

The equity market was slated for a lower opening, though the government data didn’t appear to have a big impact on pre-market trading.

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China’s PMI reading for March shows its economy is gaining steam...

China released its latest official Purchasing Managers Index (PMI) numbers, and the index, which provides a look at manufacturing levels, shows that the country continues to see growth in its economy.

The PMI manufacturing numbers for March came in at 51.8, an increase over February’s 51.6 reading.

The PMI index, which is used globally to track manufacturing growth, is based on a scale from 0-100. Any number above 50 is regarded as a relative sign of positive activity in the sector.

The bump in the March numbers brought the manufacturing metric up to the highest levels in nearly 5 years.

A movement from 51.6 to 51.8, while hardly a substantial move, still indicates that the trend in increased momentum in the manufacturing sector continues for China.

Also included in the China National Bureau of Statistics (NBS) report was the PMI for the non-manufacturing sector.

The PMI numbers for this category, including construction and a wide group of additional sectors, saw a bump up from February’s 54.2 all the way up 55.1 for March.

That marked the biggest gain in activity for the non-manufacturing sector dating back to May 2014.

Additionally, data from China’s NBS showed that growth was occurring across the board for the economy, with PMI numbers for retail, information technology, and financial services all coming in at a reading above 55.

Though China’s government data on its economy is sometimes questioned in terms of accuracy, the current round of numbers is generally considered to be reflective of the country’s current state of economic growth.