Wholesale Prices Inch Higher in February

U.S. wholesale prices edged higher in February, slightly ahead of economists’ expectations, according to the latest data released by the Labor Department.

The Producer Price Index rose 0.1% last month, down from a 0.8% increase in January. Economists were forecasting a 0.4% rise for the index. The modest increase was fueled by rising energy prices and finished goods, which offset a continuing decline in food prices and the seventh consecutive monthly drop in intermediate and crude goods.

Energy goods rose by 1.3% in February after climbing 3.7 % the month before. Within that sector, gasoline prices rose 8.7% following a 15% jump in January.

The PPI, a key gauge of inflation, measures the average change over time in the prices received by domestic producers of goods and services. The index is broken down into separate components including commodity, industry, sector and stage of processing. Like most inflationary measures, it frequently moves markets.

Core producer prices, which exclude energy and food costs, increased 0.2% in February compared with a forecast for a 0.1% increase. This followed a 0.4 percent rise in January. Core producer prices were 4% higher measured on a year-over-year basis. Compared with the same period last year wholesale prices were 1.3 percent lower, the largest decline since a 1.8 percent decrease in September 2002.

Capital equipment prices saw a modest 0.1% increase on the heels of a 0.5% increase in January. Consumer foods fell 1.6% in February following a 0.4% decrease the previous month.

Source: Factset, U.S. Labor Department

Housing Starts Soar to 19-Year High

A government report released Wednesday showed a 22% spike in the number of housing starts in February, rising to a seasonally-adjusted rate of 583,000 units from 477,000 units in January. The latest numbers came in well ahead of the forecasted 453,000 units economists were anticipating.

The strong surge in housing starts – the number of new homes beginning construction – could be a glimmer of hope that housing has bottomed or it may only add to the raft of unsold homes on the market, according to published reports.

The data, published by the U.S. Census Bureau and the Department of Housing and Urban Development, marks the largest monthly percentage increase in the number of privately-owned homes being built in 19 years. It is also the first monthly increase since June 2008.

Single-family housing starts for February came in at a rate of 357,000, a 1.1% increase from 353,000 in January. Housing starts refer to the number of residential building projects begun in a given time period.

While the latest report showed surprising growth that exceeded expectations, the numbers are extremely volatile and subject to weather-related anomalies and sharp revisions. And housing starts are still down 47% from their year-ago levels.

Building permits, typically less volatile than housing starts, rose 3% in February to an annual rate of 547,000. Permits for single-family units rose 11% to a 373,000 rate – the largest percentage gain in 18 years – as compared to 336,000 the previous month.

Privately-owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 547,000. That represents a 3% rise above the revised January rate of 531,000, but is 44.2 percent below the revised February 2008 estimate of 981,000. Single-family permits totaled 373,000, an 11.0% above the January figure of 336,000.

Source: Factset, U.S. Commerce Department