Consumer and producer prices drop; leading indicators post gains after two months of declines.
Lower energy costs are keeping consumer and producer prices under control and helping allay fears of widespread inflation in the final months of the year. Here's a look at this week's economic developments and how they may impact your business.
Consumer, Producer Prices Down
Worries over inflation eased this week following a Labor Department report showing the sharpest drop in consumer prices in 10 months.
Driven by a 13.5 percent decline in gasoline prices, overall consumer prices fell by 0.5 percent in September, the department said on Wednesday.
Yet excluding food and energy, so-called core consumer prices rose 0.2 percent, the report said. Core consumer prices have risen 2.9 percent in the past year with higher prices for clothing, housing, hotels, and rent, among other goods and services.
Still, the number of small-business owners raising average selling prices in recent months is starting to drift lower, according to William Dunkelberg, the chief economist with the National Federation of Independent Business, a Washington-based small-business lobby group.
"This trend hints at the possibility of a modest decline in the core inflation rate and, with the decline in energy prices, a lower headline rate of inflation is in the cards," Dunkelberg said in a statement following the report's release.
Meanwhile, lower energy costs also pushed down prices paid by producers in September, by 1.3 percent, the biggest month-to-month decline in three years, the Labor Department reported on Tuesday.
Excluding food and energy prices, core producer prices also rose, by 0.6 percent, following two straight months of declines, the report said. Core producer prices have risen 1.2 percent in the past year.
The amount of industrial production in the U.S. declined by 0.6 percent in September, while output in the manufacturing sector was down by 0.3 percent, the Federal Reserve reported on Tuesday.
Leading Indicators Up
After declines in July and August, the index of U.S. leading indicators rebounded modestly in September by 0.1 percent, the Conference Board said Thursday.
Five of ten components of the index made gains in September, including consumer expectations, real money supply, stock prices, jobless claims, and manufacturers orders for non-defense capital good, the New York-based private research group said.
On the downturn were building permits, average weekly manufacturing hours, vendor performance, interest rate spread, and manufacturers' orders for consumer goods and materials, the report said.
The index, which gauges the economy's strength in the months ahead, has fallen by 0.9 percent in the past six months, posting declines in five of the past eight months, the report said.
Building Permits Down
While housing starts increased in September by 5.9 percent to an annual rate of 1.772 million, the number of building permits dropped by 6.3 percent to 1.619 million, the Commerce Department reported on Wednesday.
The number of building permits issued in a given month is a good indication of the future strength of the residential construction and housing sectors.
Jobless Claims Fall
The number of new claims for unemployment benefits fell by 10,000 to 299,000 in the week ending Oct. 14, the Labor Department said Thursday.
The biggest decreased were reported in Missouri, Indiana, and Maine, while increased were reported in Michigan, Pennsylvania, and California, the department said.