The consumer price index held flat in May though it increased 3.3% from a year ago. Both numbers were 0.1 percentage point below market expectations. Excluding volatile food and energy prices, core CPI increased 0.2% on the month and 3.4% from a year ago, compared with respective estimates of 0.3% and 3.5%. Price increases were held in check by a 2% drop in the energy index and just a 0.1% increase in food.

The consumer price index showed no increase in May as inflation slightly loosened its stubborn grip on the U.S. economy, the Labor Department reported Wednesday.

The CPI, a broad inflation gauge that measures a basket of goods and services costs across the U.S. economy, held flat on the month though it increased 3.3% from a year ago, according to the department’s Bureau of Labor Statistics.

Economists surveyed by Dow Jones had been looking for a 0.1% monthly gain and a 3.4% annual rate.

Excluding volatile food and energy prices, core CPI increased 0.2% on the month and 3.4% from a year ago, compared with respective estimates of 0.3% and 3.5%.

Following the report, stock market futures pushed higher while Treasury yields slid.

Though the top-line inflation numbers were lower for both the all-items and core measures, shelter inflation increased 0.4% on the month and was up 5.4% from a year ago. Housing-related numbers have been a sticking point in the Federal Reserve’s inflation battle and make up a heavy share of the CPI weighting.

Price increases were held in check, though, by a 2% drop in the energy index and just a 0.1% increase in food. Within the energy component, gas prices tumbled 3.6%. Another nettlesome inflation component, motor vehicle insurance, saw a 0.1% monthly decline though was still up more than 20% on an annual basis.

“Finally, some positive surprises as both headline and core inflation beat forecasts,” said Robert Frick, corporate economist with Navy Federal Credit Union. “There was relief at the pump, but unfortunately home and apartment costs continue to rise and remain the main cause of inflation. Until those shelter costs begin their long-awaited fall, we won’t see major drops in CPI.”

The release comes at an important juncture for the economy as the Federal Reserve weighs its next moves on monetary policy, which will

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U.K. economic growth ground to a halt in April, according to flash figures published on Wednesday, stalling the muted rebound from last year’s recession continued. The print came in line with the expectations of economists polled by Reuters. Construction output declined 1.4% in its third straight fall. New high rise tower blocks under construction and old towers in Rotherhithe and beyond to Bermodsey seen over the River Thames on 16th January 2024 in London, United Kingdom. Mike Kemp | In Pictures | Getty Images

LONDON — U.K. economic growth ground to a halt in April, according to flash figures published on Wednesday, stalling the muted rebound from last year’s recession mere weeks ahead of a national election.

Economists polled by Reuters had expected growth to flatten, after the economy expanded by 0.4% in March.

The picture was slightly brighter on a longer timeframe, with gross domestic product up 0.7% in the three months to April.

Construction output declined 1.4% in its third straight fall, while production output was down 0.9%. Growth continued in the U.K.’s dominant services sector, which expanded by 0.2%.

The U.K. had already eked out moderate growth in each of the first three months of the year, leading to an exit from a shallow recession for the first quarter as a whole.

Lindsay James, investment strategist at Quilter Investors, attributed the April slowdown to recent gloomy weather.

“Persistent rain has kept consumers from spending,” James said in an emailed note.

“Whilst the weather has thankfully improved of late, likely boosting May’s reading, the second quarter is off to a slow start and has a lot of catching up to do if it is to match the 0.6% growth seen in the first quarter.”

Rate cut outlook

The quarterly growth reported last month had fueled bets on the Bank of England beginning interest rate cuts in June, but market expectations have shifted significantly since then.

The Bank of England meets to decide the next steps of its monetary policy on June 20. Traders see little chance of a rate cut announcement this month, instead looking toward August or September.

Labor data released on Tuesday showed U.K. unemployment unexpectedly rose to its highest level in two and a half years, while wage growth came in at a higher-than-expected at 6%, presenting a mixed

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Wednesday features a one-two punch of news that starts in the morning with the pivotal consumer price index reading for May, and ends with the Fed’s policy meeting in the afternoon. Economists expect CPI to show just a 0.1% increase from April, though that still would equate to an aggregate annual rise of 3.4%. Core PCI is projected to show a 0.3% monthly gain and a 3.5% annual rate. When it comes to interest rates, the Fed will do nothing. However, officials will offer a variety of economic forecasting updates that will include the central bank’s much-watched “dot plot” of interest rate expectations. Jerome Powell, Chairman of the U.S. Federal Reserve, speaks during the conference celebrating the Centennial of the Division of Research and Statistics, Board of Governors of the Federal Reserve System in Washington D.C., United States on November 08, 2023. (Photo by Celal Gunes/Anadolu via Getty Images) Celal Gunes | Anadolu | Getty Images

Wednesday is shaping up to be one of the most important days of the year for economic news, as investors will hear about the path of inflation and the manner in which the Federal Reserve plans to react.

In a one-two punch that starts in the morning with the pivotal consumer price index reading for May and ends with the Fed’s policy meeting in the afternoon, vital signals will be sent about the direction of the economy and whether policymakers can soon take their foot off the brake.

The day “packs months of macro risk into one day,” wrote UBS economist Jonathan Pingle.

Like many others on Wall Street, Pingle expects the CPI report, combined with last Friday’s surprisingly strong nonfarm payrolls reading and other recent data releases to lead Fed officials to tinker with their outlook for inflation, economic growth and interest rates.

Optimists are hoping that the moves fall largely within the realm of expected outcomes and don’t do much to rattle the frayed nerves of market participants.

“While both typically have proven to be market-moving events, we expect very little fireworks from both releases given our expectations for rather benign outcomes,” said Jack Janasiewicz, lead portfolio strategist at Natixis Investment Managers.

In broad strokes, here are anticipated outcomes of both events.

CPI inflation

The measure of how much a broad basket of goods and services

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The main shipping channel into the Baltimore port was fully restored for commercial transit, after the March 26 collapse of the Francis Scott Key Bridge. The bridge toppled after the cargo ship Dali crashed into the infrastructure. The restoration follows a clean-up process that removed about 50,000 tons of bridge wreckage from the Patapsco River, allowing for the gradual reopening of the channel in the weeks since. The vehicle carrier Tosca passes through an open section of the Federal channel as crane barges continue work on clearing the debris from the Francis Scott Key Bridge more than two months after the catastrophic collapse.  Jerry Jackson | Baltimore Sun | Getty Images

The main passageway into the Baltimore port was fully restored after the March 26 collapse of the Francis Scott Key Bridge, which left six people dead and obstructed maritime traffic into the harbor.

The bridge toppled in late March, after the cargo ship Dali crashed into the infrastructure, choking a major shipping artery into the U.S.’ busiest auto port.

The Port of Baltimore processed a record 1.1 million containers and $80.8 billion in foreign cargo value last year, according to state data. Six highway construction crew members who were carrying out overnight road works plunged to their deaths during the incident.

On Monday evening, the U.S. Army Corps of Engineers said that the Fort McHenry Federal Channel was reinstated to its original operational dimensions of 700 feet wide and 50 feet deep for commercial transit through the Port of Baltimore.

“We’ve cleared the Fort McHenry Federal Channel for safe transit. USACE will maintain this critical waterway as we have for the last 107 years,” said Col. Estee Pinchasin, Baltimore District commander, in a statement.

The restoration follows a clean-up process that started on March 30 and removed about 50,000 tons of bridge wreckage from the Patapsco River, allowing for the gradual reopening of the channel in the weeks since.

Salvage crews continue to work on removing debris from the Francis Scott Key Bridge collapse after it was struck by the container ship Dali, now docked at Seagirt Marine Terminal in Baltimore. (Jerry Jackson/Baltimore Sun/Tribune News Service via Getty Images) Jerry Jackson | Baltimore Sun | Getty Images

On May 20, authorities were able to refloat and remove

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Beyond signaling a still-vibrant labor market, Friday’s jobs report at the very least adds to the narrative that the Fed doesn’t have to be in a rush to lower interest rates. Following the jobs numbers, futures traders cut bets on rate cuts. Pricing in fed funds futures pointed to almost no chance of a reduction at either the FOMC’s meeting next week or on July 30-31. Traders work on the floor of the New York Stock Exchange during afternoon trading on June 03, 2024 in New York City.  Michael M. Santiago | Getty Images

May’s surprising pace of job growth along with a rise in wages added to conviction that the Federal Reserve will stay on hold through this summer and possibly beyond.

The Bureau of Labor Statistics reported Friday that nonfarm payrolls increased by 272,000 for the month, considerably higher than the Wall Street consensus of 190,000 and well above April’s comparatively muted gain of 165,000. In addition, average hourly earnings rose 4.1% over the past 12 months, more than expected.

Beyond signaling a still-vibrant labor market, the data at the very least add to the narrative that the Fed doesn’t have to be in a rush to lower interest rates. As inflation runs above the central bank’s 2% target, there’s scant evidence that higher rates are endangering broad metrics of economic growth.

“I’ve been a little flummoxed at the parlor game of when will the Fed start cutting,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “I’ve been more in the camp that neither of the components of the Fed’s dual mandate are pointing to the need to start cutting, and higher-for-longer means nothing could happen this year.”

The Fed’s “dual mandate” entails maintaining both full employment and stable prices.

Even with the unemployment rate rising to 4% in May, the labor market appears vibrant. However, on the other side of the mandate, inflation is still running well above the Fed’s target. Most gauges have prices rising annually at about a 3% rate, down significantly from the peaks of mid-2022 but still running hot.

Lowering expectations

Following the jobs numbers, futures traders cut bets on rate cuts.

Pricing in fed funds futures pointed to almost no chance of a reduction at either the Federal Open Market Committee’s meeting next week

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The unemployment rate rose for all racial groups except for white Americans in May. The uptick in jobless rates was more pronounced for Black men than women. Black men saw their unemployment rate jump to 6.4% from 5.2%. The number of eligible adults looking for jobs fell for white and Black workers, rose for Asian Americans and held steady for Hispanic workers. A representative speaks with a jobseeker at a job fair at Brunswick Community College in Bolivia, North Carolina, on April 11, 2024. Allison Joyce | Bloomberg | Getty Images

The unemployment rate for white Americans held steady from April to May, bucking the trend for all other racial groups, according to data released Friday by the Labor Department.

White unemployment remained at 3.5% last month, making the demographic group the only one that didn’t experience a rise in jobless rates from April to May. It also went against the overall unemployment rate, which edged higher to 4% from 3.9%.

Meanwhile, the jobless rate for Black Americans rose to 6.1% from 5.6%. For Asian and Hispanic workers, respectively, it rose to 3.1% from 2.8%, and to 5% from 4.8%.

“We obviously need to watch out for what’s happening with historically marginalized groups to make sure that the recovery gets experienced,” said Elise Gould, senior economist at the Economic Policy Institute.

But Gould isn’t particularly worried about the uptick in jobless rates for certain demographics just yet. “We’re not seeing any real divergence from trends there,” she added.

Gould noted that the trend was slightly stronger for Black men, who saw their unemployment rate jump to 6.4% from 5.2%, versus an increase to 5.2% from 5% for their female counterparts. The economist attributed this increase to labor force volatility and pointed out that the number has pretty much risen back to its previous levels from earlier this year.

Among white workers, the labor force participation rate crept lower, to 62.2% from 62.3%.

The overall labor force participation rate also fell to 62.5% from 62.7% and decreased to 62.9% from 63.2% for Black Americans. However, the metric rose to 65.3% from 64.7% for Asian Americans, while it held steady at 67.3% for Hispanic workers.

— CNBC’s Gabriel Cortes contributed to this report.

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The U.S. economy added 272,000 jobs for the month, coming out significantly higher than the Dow Jones consensus estimate of 190,000. Employment swung higher in several industries, with health care leading the way again this month, followed by government and hospitality. These sectors also accounted for more than half of the month’s total gains. Meanwhile, job losses occurred in department stores and furniture and home furnishings retailers.

Job growth in May was surprisingly strong, pushing back on lingering fears of a broader economic slowdown and likely slowing the Federal Reserve’s rate-cutting timeline.

The U.S. economy added 272,000 jobs for the month, coming out significantly higher than the Dow Jones consensus estimate of 190,000. That’s also higher than the average monthly gain of 232,000 over the last 12 months, according to the U.S. Bureau of Labor Statistics.

In May, employment swung higher in several industries, with health care leading the way again this month, followed by government and hospitality. The three sectors, respectively, added 68,000, 43,000 and 42,000 jobs, similar to trends seen over the past year. These sectors also accounted for more than half of the month’s total gains. The combined health-care and social assistance space netted more than 83,000 jobs in May.

The professional, scientific and technical services sector was also a bright spot in May, as it added 32,000 jobs during the month, which is much higher than the average monthly gain of 19,000 over the past 12 months.

On the other hand, social assistance employment trended higher as it added 15,000 last month, below the sector’s average of 22,000 jobs per month seen over the last year. Meanwhile, job losses occurred in department stores and furniture and home furnishings retailers.

Other major industries — including oil and gas extraction, construction, manufacturing, information and financial activities — all saw little or no change over the month in employment, per the report.

Investors walked away from the report discouraged that the Federal Reserve would cut rates in June, noting that the increase in job growth and above-average wage growth paints a picture of a fairly strong consumer.

“As has been the case recently, job growth was driven by non-cyclical areas like health care and government, but cyclical areas like leisure and hospitality were strong…this is likely

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Nonfarm payrolls expanded by 272,000 for the month, up from 165,000 in April and well ahead of the Dow Jones consensus estimate for 190,000. The unemployment rate rose to 4%, the first time it has breached that level since January 2022. Job gains were concentrated in health care, government, and leisure and hospitality, consistent with recent trends. Average hourly earnings were higher than expected as well, rising 0.4% on the month and 4.1% from a year ago.

The U.S. economy added far more jobs than expected in May, countering fears of a slowdown in the labor market and likely reducing the Federal Reserve’s impetus to lower interest rates.

Nonfarm payrolls expanded by 272,000 for the month, up from 165,000 in April and well ahead of the Dow Jones consensus estimate for 190,000, the Labor Department’s Bureau of Labor Statistics reported Friday.

At the same time, the unemployment rate rose to 4%, the first time it has breached that level since January 2022. Economists had been expecting the rate to stay unchanged at 3.9% from April.

The increase came even though the labor force participation rate decreased to 62.5%, down 0.2 percentage point. The survey of households used to compute the unemployment rate showed that the level of people who reported holding jobs fell by 408,000.

“On the surface, [the report] was hot, but you’ve also got a bigger drop in household employment,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “For what it’s worth, that tends to be a more accurate signal when you’re at an inflection point in the economy. You can find weakness in the underlying numbers.”

A more encompassing unemployment figure that includes discouraged workers and those holding part-time jobs for economic reasons held steady at 7.4%.

The household survey also showed that full-time workers declined by 625,000, while those holding part-time positions increased by 286,000.

Job gains were concentrated in health care, government, and leisure and hospitality, consistent with recent trends. The three sectors respectively added 68,000, 43,000 and 42,000 positions. The three sectors accounted for more than half the gains.

A Now Hiring sign hangs near the entrance to the PetSmart store on December 03, 2021 in Miami, Florida. Joe Raedle | Getty Images

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