This Week’s Economic Roundup
Consumers and producers faced higher prices last month, stoking fears of more interest rate hikes in the months ahead. Here's a look at this week's economic developments and how they may impact your business.
Consumer Prices Rising
Higher gas prices pushed overall consumer prices up 0.4% in March, after rising just 0.1% in February, the Labor Department reported Wednesday.
The sharper gains were led by a 1.3% rise in energy costs -- with motor fuel costs alone jumping 3.6% over the month, the department said.
Yet, even stripped of fuel and food costs, so-called core consumer prices unexpectedly rose by 0.3% -- the biggest monthly increase in a year, the report showed.
Higher prices were reported for clothes, housing and transportation, among other goods and services.
In the last 12 months, the core rate has grown by 2.1%, compared to 3.4% for the overall rate, the department said.
On Tuesday, the department reported gains of 0.5% in producer prices in March, following declines of 1.4% in February.
The gains were also blamed on higher energy costs.
Excluding fuel and food, producer prices rose a modest 0.1% in March, the department said.
Leading Indicators Down
Energy prices also dragged down the index of leading indicators by 0.1% in March, the Conference Board said Thursday.
Though slight, the downturn marked the first consecutive two-month stretch of declines in the index in five years.
Nearly half of the board's key indicators were down in March, including building permits, average weekly initial claims for unemployment insurance, new orders for nondefense capital goods, and the real money supply, while average manufacturing hours was unchanged, the board reported.
By contrast, vendor performance, stock prices, consumer expectations, manufacturers' orders and interest rate spread all made gains.
Also on the rise, by 0.2%, was the board's coincident index, a measure of current economic activity which tracks payrolls, income, and sales, among other business trends.
Housing Starts Drop
The cooling housing market took its toll on residential builders in March as the number of housing starts dropped by 7.8%, the Commerce Department reported Tuesday.
The declines brought the annual rate down to about 1.9 million, compared to 2.1 million in February, the department said.
Also down, by 5.5%, was the number of building permits, which forecasts future activity in the building sector, while housing completions were up, the department said.
Despite the declines, both housing starts and building permits were higher last month than in March 2005, the report showed.