Inflation Is Still Under Control
Constantine G. Soras, Economics Editor
The latest set of economic readings indicate that the U.S. economy is still on a roll with inflation under control outside the energy sector.
Employers slowed down the pace of hiring in February. The nation’s nonfarm payrolls grew by a slim 34,000 in February after surging 384,000 jobs in January, in part due to unseasonably mild weather across most of the country. With consumers spending at a fast pace coupled with a tight labor market, retailers kept some of the seasonal workers they would have laid off otherwise.
The jobless rate edged up to 4.1 percent from 4.0 percent in January and gains in average hourly earnings continued to be modest.
The Producer Price Index for finished goods jumped 1.0 percent as energy prices skyrocketed by 5.2 percent. In January, producer prices were unchanged and were up just 0.1 percent in December. The price index, excluding food and energy, rose 0.3 percent after falling 0.2 percent in January.
Consumer prices moved up 0.5 percent in February after rising by 0.2 percent in each of the previous four months. Energy costs shot up 4.6 percent in February and have soared 19.9 percent from a year ago. Surging petroleum prices pushed the inflation rate up to 3.2 percent from February of 1999. While there are no signs of inflation outside the energy sector, the Federal Reserve raised short-term interest rates by another quarter point, the fifth since last summer.
Industrial Output Cools Off; U.S. Economy Remains Strong
Growth of industrial output cooled off to a 0.3-percent gain in February, after advancing slightly in January and December. Factory output also rose 0.3 percent in February after surging 1.0 percent in January. Production for durable goods rose 0.4 percent. Output for non-durable industries rose 0.2 percent. The total operating rate held steady at 81.7 percent of capacity.
Housing starts gained 1.3 percent to a rate of 1.781 million units in February. Single family housing starts fell 3.9 percent in February to 1.310 million. Construction was robust in the Northeast and Midwest, but was weak in the South and flat in the West.
The trade deficit in goods and services mushroomed to $28 billion in January from $25.61 billion in December, reflecting the continued strength of the U.S. economy. Exports declined to $84.06 billion, while imports surged to $112.07 billion led by a rise in shipments of autos and crude oil imports.
Business inventories rose 0.5 percent in January, while business sales grew 0.8 percent in January after registering a robust 1.2-percent gain in December.The inventory-to-sales ratio edged down to 1.31 from 1.32 and remained close to the lowest point in the current business cycle.
Textile Shipments Escalate; Consumers On Spending Spree
Results for textiles and apparel were mixed. The industry’s payrolls slipped 0.1 percent in February, after falling 0.6 percent in January. The jobless rate for textile mill workers fell to 4.9 percent from 5.9 percent.
Shipments by textile manufacturers surged 1.3 percent in January, after gaining 1.1 percent in December. Inventories were down by 0.3 percent. The inventory-to-sales ratio dipped to 1.51 from 1.54 in December. Textile output eased 0.8 percent in February, following a gain of 1.1 percent in January. The utilization rate for textiles fell to 84.9 percent from 85.6 percent in January.
Consumers went on a spending spree in the first two months of 2000. Retail sales rose 1.1 percent after gaining 0.4 percent in January.
Retail sales, excluding autos, grew 1.0 percent in February. Apparel and accessory stores sales gained 1.0 percent in February, following a 0.8-percent increase in January.
Producer prices of textiles and apparel declined 0.3 percent in February after falling 0.2 percent in January. Prices shot up 1.9 percent for synthetic fibers. Prices increased 0.9 percent for gray fabrics, 0.4 percent for carpets, 0.2 percent for home furnishings and 0.1 percent for processed yarns and threads.