This Week's Economic Roundup
While prices keep rising for consumers and producers alike, underlying strengths in the economy are easing fears of long-term inflation. Here's a look at this week's economic developments and how they may impact your business.
Consumers and producers continued to face rising prices in June, the Labor Department reported this week.
Despite a 0.9% decline in energy prices, overall consumer prices rose by 0.2% in June, following gains of 0.4% the previous month, the department said on Wednesday.
Excluding energy and food, so-called core prices rose by 0.3%, driven by higher prices for housing, recreation, and medical care, among other goods and services, the department said.
The gains marked the fourth consecutive month of higher consumer prices and a 2.6% increase in core prices over the past year.
At the same time, producer prices jumped by 0.5%, the department said in separate report on Tuesday.
The gains were driven by soaring wholesale gasoline prices, which jumped by 6.3% in June, the department said.
Disregarding those gains, the so-called core rate rose by a modest 0.2%, the department said.
Core producer prices are up 1.9% over the past year.
Despite those reports, Federal Reserve Chairman Ben Bernanke hinted at a pause in central bank interest rate hikes during congressional testimony on Wednesday.
While acknowledging the U.S. economy is currently slowing, Bernanke said the Fed's policy decisions should be based on a "longer-term outlook for both inflation and economic growth."
His remarks sparked the month's biggest single-day rally on the U.S. stock market.
Leading Indicators Up
Following two months of declines, the index of leading economic indicators improved slightly by 0.1% in June, the Conference Board reported on Thursday.
The gains came despite ongoing declines in housing permits and vendor performance, and were buoyed by a fewer new unemployment claims and a rosier outlook by consumers, the New York-based private research group said.
Also up was the group's coincident index, which gauges current economic conditions, led by industrial production, personal income, employment and manufacturing sales, the group said.
Industrial production alone was up by 0.8% in June -- a six-year high in quarterly growth, the Federal Reserve reported on Monday
Housing Starts Fall
The once-hot housing market continued to cool in June, with the number of housing permits falling by 4.3%, the Commerce Department reported on Wednesday.
Housing starts also dropped, by 5.3%, while housing completion rose by 6.4%, the department said.
Housing permits, a gauge of future activity in the housing market, have fallen by 14.9% in the past year, the department said.
So far this month, homebuilders' confidence has dropped 15-year low, the National Association of Home Builders reported on Tuesday.
Jobless Claims Down
New claims for unemployment insurance dropped by 30,000 to 304,000 last week, the labor Department reported on Thursday.
The decline left the insured unemployment rate unchanged from the previous week at 1.9%, or about 2.5 million people, the department said.
The biggest increases in new claims were in Michigan, New York, and Ohio, the report said.