Instant view: Core CPI posts big rise; NY factories slump

Reuters

NEW YORK (Reuters) - U.S. core consumer inflation rose more than expected in May, lifted by steep rises in motor vehicle and apparel prices, the government said on Wednesday.

A gauge of manufacturing in New York State showed the sector unexpectedly contracted in June, falling below zero for the first time since November 2010 in another sign the economic slowdown could become more protracted, the New York Federal Reserve said in a report on Wednesday.

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COMMENTS:

LINDSEY PIEGZA, ECONOMIST, FTN FINANCIAL, NEW YORK

"Empire State is not looking very good. Not only did we plummet into negative territory, but excluding that one number we had in November '10 this is the lowest number since 2009. Of course, a good portion of this is from the supply disruptions from what is happening overseas in Japan but it will have an impact on auto sales, and on activity in the second half of the year."

"It certainly is going to hurt what's going on over here in the domestic economy.

"Bernanke has made it very clear that they've done everything they can do and now it's up to the Obama administration to encourage growth and get pro-small business policies in place.

"We are in unprecedented territory, so we could see talk of additional stimulus in other directions but I don't think talk of QE3 is viable right now."

KATHY LIEN, DIRECTOR OF RESEARCH, GFT FOREX, NEW YORK

"We're seeing a pretty muted reaction, probably because the hotter CPI numbers are being offset by the weak Empire State report. I'm not very worried about a mild rise in inflation but I am worried about jobs in the manufacturing sector. If the rest of the data is in line with expectations today, I'd expect the dollar to struggle on that."

DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS ON CPI:

VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS NY FED

"Whereas last month's report could have been explained as manufacturing conditions losing recovery momentum, today's report is more painting a picture of a halt in progress, which hopefully will prove brief."

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