Supply shock: jobs before prices

Unemployment has drifted to 4.3 from 3.7 fred.stlouisfed.org as Richmond Fed says "measures of global supply chain stress are on the rise" with the Middle East conflict richmondfed.org The beat is that demand still clears, with new orders at 82960 from 73668 fred.stlouisfed.org the miss is if manufacturing employment at 12596 from 12875 fred.stlouisfed.org keeps softening while core PCE at 3.20276 after 2.6148 fred.stlouisfed.org stays sticky.

Unemployment has drifted to 4.3 from 3.7 fred.stlouisfed.org as Richmond Fed says "measures of global supply chain stress are on the rise" with the Middle East conflict richmondfed.org That is the setup: the beat is that the shock stays in routes, inventories, and margins rather than final demand, and new orders at 82960 from 73668 fred.stlouisfed.org say that part has not broken. The miss is if shortages keep leaking into payrolls and output before they ease prices; manufacturing employment is down to 12596 from 12875 fred.stlouisfed.org while core PCE is back at 3.20276 after 2.6148 fred.stlouisfed.org That is why this is still priced more as a cost and inventory squeeze than a straight growth scare: activity is softer, but softer activity does not automatically guarantee easier inflation. A further loss of labor or production alongside sticky core prices could keep the rates read awkward and may shift the narrative from shipping stress to broader stagflation risk.