Wholesale prices edge up, jobless claims jump
WASHINGTON (AP)- Wholesale prices nudged up by 0.1 percent in June, the first increase in three months, lifted by higher costs for gasoline, cars and trucks. Jobless claims climbed to a six-week high. The advance in the Producer Price Index, which measures price pressures before they reach consumers, came after wholesale prices dropped by 0.2 percent and 0.4 percent in April and May, respectively, the Labor Department reported Thursday.
Even with June’s small increase, the report suggested that inflation remains under control.
“Inflation is not a problem,” said economist Joel Naroff of Naroff Economic Advisors.
On Wall Street, stocks continued their decline. The Dow Jones industrial average was down 59 points and the Nasdaq was off around 2 points in morning trading.
In another report, new claims for unemployment insurance shot up last week by a bigger-than-expected 16,000 to a seasonally adjusted 403,000, the highest level since May 25, the department said. It was the first increase in three weeks.
Economists predicted claims would move higher in part because auto plants temporarily shut down around this time each year to retool for new models. Some textile plants often temporarily close in July, they said.
In a third report, many of the nation’s biggest retailers saw sales rebound in June after a lackluster spring. Warm weather got consumers back into store and malls.
That’s good news for the economic recovery. Consumer spending accounts for two-thirds of all economic activity in the United States.
Chains including Wal-Mart Stores Inc., Kohl’s Corp. and Target Corp. once again beat Wall Street expectations Thursday as storeowners announced their June results.
Sales at department stores and mall-based clothing stores were again sluggish, but did show some improvement from past months. Limited Brands Inc. and Saks Inc. beat Wall Street forecasts.
With inflation remaining tame, the Federal Reserve will have leeway to hold interest rates steady at 40-year lows. The Fed cut short-term interest rates 11 times last year to rescue the economy from recession. But at the Fed’s four meetings this year, it has opted to leave rates unchanged, citing concerns about the recovery’s vitality.
Economists worry that higher unemployment, a sour stock market and a stream of accounting scandals could make consumers and businesses less willing to spend and invest, slowing the recovery even more.
The more stable four-week moving average of jobless claims, which smoothes out weekly fluctuations, edged up to 395,000 last week, suggesting that the job market continues to be sluggish.
With mediocre job creation in June, the nation’s unemployment rate moved up a notch to 5.9 percent.
In the inflation report, the reading for the overall PPI reading in June matched analysts’ expectations. However, after being flat in May, the “core” rate of wholesale inflation – which excludes energy and food prices – rose 0.2 percent in June. That was double what many analysts had forecast.
Still, for the 12 months ending June, wholesale prices fell by 2.1 percent. Falling prices can offer some good deals for consumers. But for companies whose product prices are doing down, it means more pressure on already pressed profit margins.
In June energy prices were flat, after dropping by 2.3 percent in May. Gasoline prices rose 1 percent, residential electricity prices increased 0.7 percent and natural gas prices were up 0.5 percent. Those higher costs were tempered by a 0.6 percent decline in the price of heating oil. Car prices increased 0.4 percent in June and prices for light trucks, such as SUVs, rose 0.5 percent, the biggest increase since February.
Food prices edged up 0.1 percent, after falling by 0.2 percent in May. Higher prices for vegetables, eggs and beef outweighed lower prices for fruits, dairy products and fish.
Elsewhere in the report, computer prices dropped by 1.6 percent in June and sporting goods prices fell 1.3 percent, the biggest decline since November 1992.