rent and the equivalent for owner - occupied homes, is 8. 2 percent on a 12month basis. housing is a big part of inflation, and while rent increases on new leases have come down considerably over the past year, it will take some time for this softening in rents to show through to the 12 - month changes. and, finally, inflation in nonhousing services, the largest component of services, has been stubbornly high at around 4. 5 percent and shows no signs of significant decline yet. recent stress in the banking sector overall, the u. s. banking system is sound and resilient, and i am confident it will be able to continue to play its important role providing credit to households and businesses. nevertheless, it is reasonable to expect that recent stress events will lead some banks to tighten credit standards further. the evidence is that so far there has been only a modest incremental tightening of lending conditions, which had already tightened considerably over the past year since the federal reserve began raising interest rates. in a survey conducted by the federal reserve in april, loan officers reported that 46 percent of banks had tightened credit terms in the previous three months for commercial and industrial lending to larger firms, versus 44. 8 percent that had tightened in the january survey. the april survey's increase in the share of banks reporting tightening was similar, though a bit larger, for commercial and industrial 2 / 3 bis - central bankers'speeches lending to smaller firms. at this point, it is hard to tell how much of this tightening was in train already, after continued increases in interest rates, and it is likewise difficult to say how much the stress in midsized banks will ultimately curtail credit in the coming year. furthermore, there is considerable uncertainty about the magnitude of the impact on household spending and business investment, and this uncertainty complicates economic outlook forecasts. the insurance industry resiliency given your gathering here today, i would be remiss if i did not say a word or two about the insurance industry before closing. the insurance industry has performed well through recent stresses. although the profitability of property and casualty insurance companies in 2022 was reduced by natural catastrophes and inflation, the industry's capital appears strong when considering a range of plausible stress events. for life insurers, the recent increase in interest rates has been a mostly welcome development that has supported higher investment returns but also poses risks, such as early withdrawals by some policyholders.

inflation and current trends in productivity growth. wage gains are welcome as long as they are consistent with price stability. over the 12 months ended in march 2023, the employment cost index ( eci ) for total hourly compensation for private - sector workers rose 4. 8 percent, down only a little from its peak of 5. 5 percent last june. 1 / 3 bis - central bankers'speeches my expectation is that the slowing economy will soon begin to reduce job growth, with labor supply and labor demand coming into better balance. the unemployment rate may rise gradually to levels still consistent with a growing economy. data on job openings and voluntary quits by workers indicate that labor demand has eased somewhat, and this is reflected also in a modest decline in the growth of average hourly earnings, from a 12 - month rate of 5 percent in november to 4. 4 percent in april. inflation now let me turn to the outlook for inflation. while inflation has come down substantially since last summer, it is still too high, and by some measures progress has been slowing. after peaking at a 12 - month rate of 7 percent last june, personal consumption expenditures ( pce ) inflation fell to 4. 2 percent in march, which is also down from 5. 1 percent in february. that reflects substantial decreases in energy prices and a big slowdown in food inflation. cheaper energy and a slowdown in food price increases are good news for lower - and middle - income households that spend a larger share of their income for these items. but outside of energy and food, the progress on inflation remains a challenge. excluding these prices, which tend to be more volatile than prices of other goods and services, leaves what we call " core " inflation, and this measure is a useful guide to discern longer - lasting movements in inflation. core pce inflation was 4. 6 percent in march, down from a peak of 5. 4 percent in february 2022. while we do not have a report on pce inflation for april yet, another inflation measure, the core component of the consumer price index ( cpi ), showed little further improvement in april. looking more closely at core inflation, i like to divide it into three parts - core goods inflation ; housing, which is classified as a service ; and nonhousing services. core goods inflation fell sharply over the second half of 2022 as supply - chain bottlenecks eased, but more recently it has stabilized at around 2. 6 percent. housing services inflation, which includes