us producer prices edge up
Last Updated : GMT 18:08:33
Arab Today, arab today
Arab Today, arab today

US producer prices edge up

Arab Today, arab today

Arab Today, arab today US producer prices edge up

Washington - Arabstoday

WASHINGTON/NEW YORK - US consumer sentiment cooled again in early July to its lowest level in seven months as Americans took a dim view of their finances and job prospects, a survey released on Friday showed. Separately, producer prices rose only slightly last month as energy costs dropped, suggesting inflation pressures remain muted and leaving the door open for more easing by the Federal Reserve. It was the second month in a row that consumer sentiment eroded after a streak of gains that started in September. The Thomson Reuters/University of Michigan’s preliminary reading on the overall index on consumer sentiment fell to 72.0 from 73.2 in June, frustrating economists’ expectations for a slight gain to 73.4. It was the lowest level since December 2011. “Sentiment is really soggy,” said Cary Leahey, managing director and economist at Decision Economics. “You can’t get overly concerned at the moment, but it’s just an indication that the average household is pretty queasy about the current state of play and the US economy.” Only 19 percent of consumers expected to be financially better off in the coming year, the lowest proportion ever recorded by the survey. Americans were also gloomy about their longer-term prospects with 39 percent anticipating their situation would be better in five years. “The greatest concern to consumers is that wage and job growth will remain depressed over the foreseeable future, and that these meager gains are likely to be further diminished in the years ahead by rising taxes and benefit cutbacks,” survey director Richard Curtin said in a statement. The gauge of consumer expectations slipped to 64.8 from 67.8, also the lowest since December. While there was widespread recognition of an economic slowdown, that did not have a large impact on consumers’ economic outlook, and the barometer of current economic conditions rose to 83.2 from 81.5. Still, news of job losses was mentioned twice as frequently as job gains, the opposite of the first six months of the year. Financial markets had little reaction to the data. US stocks rose more than 1 percent in early morning trading after data from China allayed concerns a slowdown in the world’s second-largest economy would further hinder growth worldwide. The euro bounced from a two-year low against the dollar, while Treasuries prices held at lower levels. The Labor Department said on Friday seasonally adjusted producer prices rose 0.1 percent last month. Analysts polled by Reuters expected the index to drop 0.5 percent. The increase was driven by gains in consumer goods like household appliances, light trucks and pet food. “The modest 0.1 percent increase in US producer prices in June is another illustration that the Fed doesn’t need to worry about inflation, at least not in the near-term,” said Paul Ashworth, chief US economist at Capital Economics in Toronto. While wholesale prices of finished goods rose, costs for intermediate and crude goods fell, suggesting less inflation pressure down the road. Energy prices dropped 0.9 percent in June, dragged down by a record drop in prices for residential electric power, which fell 2.1 percent. Diesel fuel prices sank 8.8 percent. The fall in energy prices is likely to help the economy as lower costs for fuels and other input prices leave companies more money to spend on other things, such as equipment or even hiring. Hiring by US companies slowed dramatically in the second quarter as employers grew worried about a sagging global economy hurt by Europe’s snowballing debt crisis. Many employers are concerned over plans by the US government to cut spending and let tax cuts expire next year, a jolt that could send the economy into recession. So-called core inflation, which strips out more volatile food and energy prices, rose 0.2 percent, in line with expectations. While overall inflation has cooled recently, core inflation has held at higher levels. Some policymakers at the Fed worry that further moves to lower borrowing costs could fuel higher inflation, though the central bank has said it was ready to do more to help the economy if needed. Americans’ inflation expectations stayed in check in July. The University of Michigan survey showed consumers’ one-year inflation expectation falling to its lowest level since October 2010 at 2.8 percent from 3.1 percent. The five-to-10-year inflation outlook held steady at 2.8 percent. From khaleejtimes

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