By Juliegrace Brufke | Quincy News Correspondent
Click here for updates on this story
Washington (Quincy News) — A series of economic reports this week pointed to resilient growth and persistent inflation pressures ahead of the Federal Reserve’s upcoming policy meeting, though markets continued to expect officials to leave interest rates unchanged.
The Federal Open Market Committee voted unanimously last month to hold its benchmark rate in a range of 3.5% to 3.75%. Most investors expected the central bank to leave rates unchanged at the conclusion of its two-day meeting on Wednesday, but new data on the labor market and business activity have added to signs that higher borrowing costs may eventually be needed.
The Labor Department reported Thursday that initial claims for unemployment benefits fell by 22,000 to a seasonally adjusted 187,000 in the week ended July 18. That was the lowest level since September 1969 and came in well below forecasts.
Separately, S&P Global’s flash PMI data on Friday showed service-sector companies raising prices at the fastest rate in nearly four years. Input costs across manufacturing and services rose at their strongest pace since May 2025.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said the survey is consistent with gross domestic product growing at an annualized rate of about 2% early in the third quarter. He cautioned that the improvement may not last.
“Some of this improvement may prove short-lived as July saw hospitality spend boosted by the FIFA World Cup and USA 250 anniversary activities,” Williamson said. He also noted a “concerning intensification of supply chain delays and accompanying renewed upturn in price pressures.”
Williamson said the ongoing U.S.-Iran war is likely to add to those pressures.
“Events over recent days in the Middle East will have only further exacerbated these supply chain and price worries and raise downside risks to the near-term outlook for the economy,” he said.
The business survey contrasted with the June consumer price index, which showed the annual inflation rate falling to 3.5% from 4.2% in May.
Federal Reserve officials have cautioned against reading too much into the cooler inflation reading. Chair Kevin Warsh has said the effort to bring inflation down remains unfinished. Fed Governor Lisa Cook said in a July 15 speech that elevated inflation remained top of mind and that inflation risks currently outweighed risks to employment.
Interest-rate futures on Friday implied a roughly 38% chance of a quarter-point rate increase at Wednesday’s meeting, up from about 12% a week earlier.
West Texas Intermediate crude traded around $89 a barrel Friday after topping $90 the previous day, while the yield on the 10-year Treasury note traded near 4.68% after briefly reaching 4.71%.
Please note: This story was provided to CNN Wire by an affiliate and does not contain original CNN reporting. This content carries a strict local market embargo. If you share the same market as the contributor of this article, you may not use it on any platform.
