A measure of wholesale prices increased less than expected in March, providing some potential relief from worries that inflation will hold higher for longer than many economists had expected.

The producer price index rose 0.2% for the month, less than the 0.3% estimate from the Dow Jones consensus and not as much as the 0.6% increase in February, according to a release Thursday from the Labor Department’s Bureau of Labor Statistics.

However, on a 12-month basis, the PPI climbed 2.1%, the biggest gain since April 2023, indicating pipeline pressures that could keep inflation elevated.

Excluding food and energy, the core PPI also rose 0.2%, meeting expectations. Excluding trade services from the core level, the increase was 0.2% monthly but 2.8% from a year ago.

The release comes a day after the BLS reported that consumer prices again rose more than expected in March, raising concerns that the Federal Reserve will be unable to lower interest rates anytime soon.

On the producer price side, March’s gain was pushed by services, which saw a 0.3% increase on the month. Within that category, the index for securities brokerage and other investment-related fees jumped 3.1%.

Conversely, goods prices decreased 0.1%, flipping a 1.2% increase in February. Final demand costs for energy, which have been on the rise lately, actually fell 1.6% on the month. However, wholesale prices for final demand food and goods less food and energy climbed 0.8% and 0.1%, respectively.

Though prices have been rising at the pump, the final demand index for gasoline fell 3.6%. That contrasted with the consumer price index, which showed gasoline up 1.7% on the month.

Markets showed little reaction to the data, with futures tied to major stock indexes slightly higher though Treasury yields declined.

In other economic news Thursday, initial filings for jobless benefits fell to 211,000, a decline of 11,000 from the previous week’s upwardly revised level and below the 217,000 estimate from Dow Jones.

Continuing claims, which run a week behind, increased to 1.82 million, up 28,000 for the period, according to the Labor Department release.

The economic data points are being watched closely as the Federal Reserve contemplates its next moves on monetary policy.

Wednesday’s CPI release jolted markets, which had been anticipating an aggressive series of interest rate cuts this year. The report showed annual inflation running at 3.5%, well above the Fed’s 2% target.

The market now is pricing in the possibility of just two cuts this year, likely not starting until September, according to CME Group data.

Wholesale prices accelerated at a faster than expected pace in February, another reminder that inflation remains a troublesome issue for the U.S. economy.

The producer price index, which measures pipeline costs for raw, intermediate and finished goods, jumped 0.6% on the month, the Labor Department’s Bureau of Labor Statistics reported Thursday. That was higher than the 0.3% forecast from Dow Jones and comes after a 0.3% increase in January.

Excluding food and energy, core PPI accelerated by 0.3%, compared to the estimate for a 0.2% increase. Another measure that also excludes trade services increased 0.4%, compared to the 0.6% gain in January.

On a year-over-year basis, the headline index increased 1.6%, the biggest move since September 2023.

A busy morning for economic data also showed that retail sales rebounded, up 0.6% on the month according to Commerce Department data that is adjusted seasonally but not for inflation. The increase helped reverse a downwardly revised 1.1% slump in January but was still below the estimate for a 0.8% increase.

Also, initial filings for unemployment insurance nudged lower to 209,000 last week, a decrease of 1,000 and below the estimate for 218,000, the Labor Department reported.

The market focused on the PPI release, which comes two days after the consumer price index, which measures what consumers pay in the marketplace, showed that inflation was slightly higher than anticipated on a year-over-year basis.

PPI is considered a leading indicator for inflation as it indicates costs early in the supply chain.

The BLS reported that about two-thirds of the rise in headline PPI came from a 1.2% surge in goods prices, the biggest increase since August 2023. As with CPI, the acceleration was traced to energy prices, with saw a 4.4% increase in the final demand measure. Gasoline prices jumped 6.8% at the wholesale level.

Services costs increased 0.3%, boosted by a 3.8% surge in traveler accommodation services.

On the retail sales side, the data indicated that consumers kept ahead of CPI inflation, which increased 0.4% on the month, though sales were still sluggish.

Excluding auto, retail sales rose 0.3%, one-tenth of a percentage point below expectations. Motor vehicle parts and dealers saw an increase of 1.6%, second only to the 2.2% gain for building material and garden centers on the month.

Despite slumping prices, gasoline stations reported an increase of 0.9%. Electronics and appliance sales rose 1.5% while miscellaneous store sales increased 0.6% and restaurants and bars were up 0.4%.

Retail sales posted a 1.5% gain on a year-over-year basis, below the 3.2% increase in the CPI.

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Inflation rose again in February, keeping the Federal Reserve on course to wait at least until the summer before starting to lower interest rates.

The consumer price index, a broad measure of goods and services costs, increased 0.4% for the month and 3.2% from a year ago, the Labor Department’s Bureau of Labor Statistics reported Tuesday. The monthly gain was in line with expectations, but the annual rate was slightly ahead of the 3.1% forecast from the Dow Jones consensus.

Excluding volatile food and energy prices, the core CPI rose 0.4% on the month and was up 3.8% on the year. Both were one-tenth of a percentage point higher than forecast.

While the 12-month pace is off the inflation peak in mid-2022, it remains well above the Fed’s 2% goal as the central bank approaches its two-day policy meeting in a week.

A 2.3% increase in energy costs helped boost the headline inflation number. Food costs were flat on the month, while shelter rose another 0.4%.

The BLS reported that the increases in energy and shelter amounted to more than 60% of the total gain. Gasoline jumped 3.8% on the month while owners’ equivalent rent, a hypothetical gauge of what homeowners could get renting their properties, rose 0.4%.

“Inflation continues to churn above 3%, and once again shelter costs were the main villain. With home prices expected to rise this year and rents falling only slowly, the long-awaited fall in shelter prices isn’t coming to the rescue any time soon,” said Robert Frick, corporate economist at Navy Federal Credit Union. “Reports like January’s and February’s aren’t going to prompt the Fed to lower rates quickly.”

Airline fares posted a 3.6% increase, apparel prices rose 0.6% and used vehicles were up 0.5%. Medical care services, which helped feed a higher-than-expected CPI increase in January, decreased 0.1% last month.

The year-over-year increase for headline CPI was 0.1 percentage point higher than January, while core was one-tenth of a point lower.

Markets showed little initial reaction after the news broke, with futures tied to major stock averages as well as Treasury yields slightly higher.

While the 12-month pace is off the inflation peak in mid-2022, it remains well above the Fed’s 2% goal as the central bank approaches its two-day policy meeting in a week.

Fed officials in recent weeks both have signaled that rate cuts are likely at some point this year and expressed caution about letting up too soon in the battle against high prices. The statement after the January meeting indicated that policymakers need “greater confidence” that inflation is moving back to target.

Chair Jerome Powell, in congressional testimony last week, echoed those concerns, though he did mention that the Fed is probably “not far” from the point where it can start easing up on monetary policy.

Tuesday’s report “leaves Fed officials some way from attaining the ‘greater confidence’ needed to begin cutting interest rates,” said Paul Ashworth, chief North America economist at Capital Economics.

For financial markets, the shift in the Fed stance from its apparent policy pivot in late 2023 has meant a repricing on the pace of rate cuts. Where futures traders entered the year expecting cuts to start coming in March, with six or seven total on the year, they have pushed out the first reduction to June, with three to follow, assuming cuts in quarter percentage point increments.

A bustling economy has helped the Fed focus on incoming data and allowed policymakers to avoid having to rush to lower rates. Gross domestic product expanded at a 2.5% annualized pace in 2023 and is on pace to increase at a 2.5% pace in the first quarter of 2024, according to the Atlanta Fed’s GDPNow tracker.

One key ingredient in that growth has been a resilient consumer boosted by a strong labor market. The economy added another 275,000 nonfarm jobs in February, though the increase skewed heavily to part-time jobs and the unemployment rate rose to 3.9%.

Such strength can be a double-edged sword: While the growth in the face of aggressive rate hikes has bought the Fed time on policy, it also raises concerns that inflation could be more durable than expected.

Housing costs in particular have caused concern.

Shelter comprises about one-third of the CPI weighting and has been slow to decelerate, at least according to the BLS measure. Fed officials see rental prices coming down through the year, and other measures outside the CPI computation of owners-equivalent rent have shown easing price pressures.

Correction: The BLS reported that the increases in energy and shelter amounted to more than 60% of the total gain. An earlier version misstated a sector.

Eli Lilly on Tuesday reported fourth-quarter revenue and adjusted earnings that topped expectations on the strong launch of its new weight loss drug, Zepbound, and higher prices for its blockbuster diabetes drug, Mounjaro.

Zepbound, which won approval from U.S. regulators in early November, raked in $175.8 million in sales for the fourth quarter.

The quarterly results are the first to include sales of Zepbound, which some analysts say could post more than a billion dollars in sales in its first year on the market and eventually, become the biggest drug of all time. 

Shares of Eli Lilly were up about 5% in premarket trading Tuesday.

Here’s what Eli Lilly reported for the fourth quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

Earnings per share: $2.49 adjusted vs. $2.22 expectedRevenue: $9.35 billion vs. $8.93 billion expected

Eli Lilly posted net income of $2.19 billion, or $2.42 a share, for the fourth quarter. That compares with a profit of $1.94 billion, or $2.14 a share, a year earlier. 

Excluding one-time items associated with the value of intangible assets, among other adjustments, the company posted a per-share profit of $2.49 cents for the fourth quarter of 2023.

The pharmaceutical giant booked fourth-quarter revenue of $9.35 billion, up 28% from the same period a year ago.

Eli Lilly also issued its full-year forecast for 2024, which was generally in line with expectations.

The company expects full-year adjusted earnings of $12.20 to $12.70 per share. Eli Lilly also forecast 2024 revenue of $40.4 billion to $41.6 billion.

Analysts surveyed by LSEG expected full-year adjusted earnings of $12.43 per share and sales of $39.38 billion.

Shares of Eli Lilly jumped almost 60% last year as weight loss drugs skyrocketed in popularity despite hefty price tags, mixed insurance coverage and a handful of unpleasant side effects. With a market cap of roughly $673 billion, Eli Lilly is the largest pharmaceutical company based in the U.S. 

Higher prices for older drugs, particularly Mounjaro, helped drive up Eli Lilly’s revenue, the company said. Mounjaro booked $2.21 billion in sales for the fourth quarter, up from just $279.2 million in the same period a year ago. 

Analysts had expected the drug to bring in $1.73 billion in worldwide sales, according to estimates compiled by FactSet.

That increase reflects increased demand but also “higher realized prices” in the U.S. due to decreased use of Eli Lilly’s savings card programs as access to the drug continued to expand during the quarter, the company said. The savings card programs aim to help lower the out-of-pocket costs for drugs like Mounjaro for patients.

Revenue growth was also driven by sales of Eli Lilly’s breast cancer pill Verzenio, which rose 42% to $1.15 billion for the quarter due to increased demand and higher prices.

Those results came in under analysts’ expectations, however, which called for $1.18 billion in sales for the period. 

Sales of Jardiance, a tablet that lowers blood sugar in Type 2 diabetes patients, climbed 30% to $798.1 million for the fourth quarter. Analysts had expected $771.8 million in sales from Jardiance. 

Jardiance, which Eli Lilly shares with Boehringer Ingelheim, is among the first 10 drugs selected to face price negotiations with the federal Medicare program. Those price talks heated up last week after Medicare sent its initial price offers for each drug to the manufacturers. 

Meanwhile, Eli Lilly said higher prices were offset by lower prices of its other diabetes medicine Trulicity and insulin product Humalog.

Trulicity reported $1.67 billion in revenue, down 14% from the same period a year ago. Analysts had expected Trulicity to rake in $1.77 billion in sales for the quarter. 

Humalog saw $366.6 million in revenue for the quarter, down 33% from the year-ago period. Analysts had expected the medicine to book $438 million in sales, according to FactSet.

That decrease isn’t a surprise: Last year, Eli Lilly said it would cut prices of Humalog and another commonly prescribed insulin by 70% and cap monthly out-of-pocket costs at $35 at certain retail pharmacies for people who have private insurance starting May 1, 2023.

Eli Lilly will hold an earnings call with investors at 10:00 a.m. ET on Tuesday. 

Executives will likely be asked about whether the company has made more progress in addressing the supply issues plaguing its weight loss and diabetes drugs. 

There may also be questions related to the timing of the FDA’s decision on Eli Lilly’s experimental Alzheimer’s drug, donanemab, which significantly slowed the progression of the memory-robbing disease in patients at the early stages of it.

The company did not mention the drug in its earnings release.

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North Korea’s first attempt at launching a military spy satellite resulted in failure on Wednesday, with South Korea’s military picking up wreckage after the carrier rocket crashed into its western waters.

North Korea’s state media agency, the Korean Central News Agency, said that an “accident” occurred during the launch of a military reconnaissance satellite.

“The carrier rocket ‘Chollima-1’ fell to the West Sea of Korea after losing thrust due to the abnormal starting of the second-stage engine after the separation of the first stage during the normal flight,” it said on the English language version of its website.

The rocket, with a mounted satellite, was launched at 6:27 a.m. local time as it previously announced.

North Korea’s state media added that the failed launch was due to “low reliability and stability of the new-type engine system applied” to the carrier rocket and the “unstable character of the fuel used.”

South Korean officials added that they are in the process of recovering “what could be the wreckages from the purported ‘space launch vehicle’ fired by North Korea.”

South Korea, Japan and the U.S. condemned North Korea’s Wednesday morning launch and emphasized that it was a violation of a United Nations security council resolution.

The U.S.’s National Security Council said in a statement: “The door has not closed on diplomacy but Pyongyang must immediately cease its provocative actions and instead choose engagement.”

“The United States will take all necessary measures to ensure the security of the American homeland and the defense of our Republic of Korea and Japanese allies,” it added.

North Korea state media added that it will make a second attempt “as soon as possible” after looking into the “serious defects” from Wednesday’s launch.

Officials in South Korea and Japan also acknowledged the possibility of an imminent launch from Pyongyang.

“North Korea has consistently shown its intention to strengthen its nuclear and missile capabilities, and we believe there is a possibility that it will continue to launch various types of missiles, conduct nuclear tests, and engage in other provocations in the future,” Japan’s chief cabinet secretary Hirokazu Matsuno told reporters in a briefing.

South Korea’s presidential office also said that its National Security Council convened a meeting following North Korea’s launch.

“The NSC members decided to continuously monitor North Korea’s possible additional launch and maintained cooperation with allies and friendly nations,” South Korea’s NSC said.

Nonfarm payrolls growth in March was about in line with expectations, but showed signs that the jobs picture is in the early stages of a slowdown.

The Labor Department reported Friday that payrolls grew by 236,000 for the month, compared to the Dow Jones estimate for 238,000 and below the upwardly revised 326,000 in February.

The unemployment rate ticked lower to 3.5%, against expectations that it would hold at 3.6%, with the decrease coming as labor force participation increased to its highest level since before the Covid pandemic.

Though it was close to what economists had expected, the total was the lowest monthly gain since December 2020 and comes amid efforts from the Federal Reserve to slow labor demand in order to cool inflation.

Along with the payroll gains came a 0.3% increase in average hourly earnings, pushing the 12-month increase to 4.2%, the lowest level since June 2021. The average work week edged lower to 34.4 hours.

“Everything is moving in the right direction,” said Julia Pollak, chief economist for ZipRecruiter. “I have never seen a report align with expectations as much today’s over the last two years.”

Though the stock market is closed for Good Friday, futures rose following the report. Treasury yields also moved higher.

Leisure and hospitality led sectors with growth of 72,000 jobs, below the 95,000 pace of the past six months. Government (47,000), professional and business services (39,000) and health care (34,000) also posted solid increases. Retail saw a loss of 15,000 positions.

While the February report was revised up from its initially reported 311,000, January’s number moved lower to 472,000, a reduction of 32,000 from the last estimate.

An alternative measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons edged lower to 6.7%. The household survey, which is used to calculate the unemployment rate, was much stronger than the establishment survey, showing growth of 577,000 jobs.

The unemployment rate for Blacks tumbled 0.7 percentage points to a record low 5%, according to data going back to 1972.

The report comes amid a bevy of signs that job creation is on wane.

In separate reports this week, companies reported that layoffs surged in March, up nearly 400% from a year ago, while jobless claims were elevated and private payroll growth also appeared to slow. The Labor Department also had reported that job openings fell below 10 million in February for the first time in nearly two years.

That all has followed a year-long Fed campaign to loosen up what had been a historically tight labor market. The central bank has boosted its benchmark borrowing rate by 4.75 percentage points, the quickest tightening cycle since the early 1980s in an effort to bring down spiraling inflation.

The job gains came during a month in which the failure of Silicon Valley Bank and Signature Bank rocked the financial world. Economists expect the banking troubles to have repercussions in coming months.

“The March data effectively are a look back into the pre-SVB world; the payroll survey was conducted the week after the bank failed, far too soon for employers to have responded. But the hit from tighter credit conditions is coming,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Several Fed officials said this week they remain committed to the inflation fight and see interest rates staying elevated at least in the near term. Market pricing shifted following Friday’s report, with traders now expecting the Fed to implement one last quarter percentage point hike in May.

“This is great news for the Federal Reserve. They don’t have any concerns for the labor market when they make the next decision,” Pollak said. “Today’s report is just a checkmark for them.”

Investors worry, though, that the Fed move are likely to result in at least a shallow recession, something the bond market has been pointing to since mid-2022.

In its most recent calculation, through the end of March, the New York Fed said the spread between 3-month and 10-year Treasurys are indicating about a 58% probability of recession in the next 12 months. The Atlanta Fed’s GDP tracker is indicating growth of just 1.5% in the first quarter, after pointing to a gain of as much as 3.5% just two weeks ago.

Federal Reserve Chairman Jerome Powell on Tuesday cautioned that interest rates are likely to head higher than central bank policymakers had expected.

Citing data earlier this year showing that inflation has reversed the deceleration it showed in late 2022, the central bank leader warned of tighter monetary policy ahead to slow a growing economy.

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“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell said in remarks prepared for two appearances this week on Capitol Hill. “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”

Those remarks carry two implications: One, that the peak, or terminal, level of the federal funds rate is likely to be higher than the previous indication from the Fed officials, and, two, that the switch last month to a smaller quarter-percentage point increase could be short-lived if inflation data continues to run hot.

In their December estimate, officials pegged the terminal rate at 5.1%. Current market pricing moved higher following Powell’s remarks, to a range of 5.5%-5.75%, according to CME Group data. Powell did not specify how high he thinks rates ultimately will go.

The speech comes with markets generally optimistic that the central bank can tame inflation without running the economy into a ditch.

Stocks fell sharply while Treasury yields jumped after Powell’s remarks were released. Market pricing also titled sharply to a strong possibility of a 0.5 percentage point interest rate hike when the Federal Open Market Committee meetings March 21-22.

January data shows that inflation as gauged by personal consumption expenditures prices — the preferred metric for policymakers — was still running at a 5.4% pace annually. That’s well above the Fed’s 2% long-run target and a shade past the December level.

Powell said the current trend shows that the Fed’s inflation-fighting job is not over, though he noted that some of the hot January inflation data could be the product of unseasonably warm weather.

“We have covered a lot of ground, and the full effects of our tightening so far are yet to be felt. Even so, we have more work to do,” he said, adding that the road there could be “bumpy.”

Powell speaks Tuesday before the Senate Banking, Housing and Urban Affairs Committee then will address the House Financial Services Committee on Wednesday.

The chairman faced some pushback from Democrats on the Senate panel who blamed inflation on corporate greed and price gouging and said the Fed should reconsider its rate hikes. Sen. Elizabeth Warren, D-Mass., a frequent Powell critic, charged that the Fed’s inflation goals will put 2 million people out of work.

“We’re taking the only measures we have to bring inflation down,” Powell said. “Will working people be better off if we just walk away from our jobs if inflation remains at 5, 6%?”

The Fed has raised its benchmark fund rate eight times over the past year to its current targeted level between 4.5%-4.75%. On its face, the funds rate sets what banks charge each other for overnight lending. But it feeds through to a multitude of other consumer debt products such as mortgages, auto loans and credit cards.

In recent days, some officials, such as Atlanta Fed President Raphael Bostic, have indicated that they see the rate hikes coming to a close soon. However, others, including Governor Christopher Waller, have expressed concern about the recent inflation data and say tight policy is likely to stay in place.

“Restoring price stability will likely require that we maintain a restrictive stance of monetary policy for some time,” Powell said. “The historical record cautions strongly against prematurely loosening policy. We will stay the course until the job is done.”

Powell noted some progress on inflation for areas such as housing.

However, he also noted “there is little sign of disinflation” when it comes to the important category of services spending excluding housing, food and energy. That is an important qualifier considering that the chairman at his post-meeting news conference in early February said the disinflationary process had begun in the economy, remarks that helped send stocks higher.

Markets mostly had expected the Fed to enact a second consecutive quarter-point, or 25 basis points, rate increase at the Federal Open Market Committee meeting later this month. However, as Powell spoke markets priced in a 69% probability of a higher half-point increase at the March meeting, according to CME Group data.

Powell reiterated that rate decisions will be made “meeting by meeting” and will be dependent on data and their impact on inflation and economic activity, rather than a preset course.