> BLS DAILY REPORT, THURSDAY, FEBRUARY 19, 1998
>
> __Led by a sharp drop in finished energy prices and declines in about
> every other category, the Producer Price Index for Finished Goods fell
> a seasonally adjusted 0.7 percent in January, BLS reports. Over the
> last year, the finished goods price index fell 1.8 percent, the
> largest 12-month drop since 1986, when the index was down 2.3 percent,
> BLS said. The 12-month decline also was largely due to falling energy
> prices. Analysts said the report shows deflation has appeared at the
> wholesale price level ….(Daily Labor Report, page D-1).
> __A steep decline in energy costs pushed the PPI down 0.7 percent in
> January, the biggest one-month drop in more than four years. In a
> second report, the Commerce Department said construction of new homes
> and apartments remained at a high level - an annual rate of 1.54
> million units in January. That was down 0.3 percent from the previous
> month, but December's figures were revised. Instead of falling 0.8
> percent, construction of new homes and apartments actually rose 1
> percent in December (Washington Post, page D1).
> __Reinforcing evidence of a robust economy and nearly nonexistent
> inflation, the Government reported yesterday that prices paid by
> manufacturers posted the biggest decline in nearly four years last
> month, while housing construction remained vibrant ….John M. Galvin,
> assistant commissioner for industrial prices at BLS, said that "these
> are very different numbers we are reporting now than a couple of years
> ago, that is for sure." Most analysts had predicted the general
> trends of the producer price and housing reports …."Falling demand in
> Asia is one of the things keeping energy prices soft, but it is only
> one factor," Galvin said. "We made an effort to look for an Asian
> effect, but we didn't see any real change in our indexes from four to
> six months ago. Galvin said he did learn of anecdotal evidence about
> steep declines in the export prices of a few relatively esoteric items
> - cattle hides and metals like steel scrap - to the four Asian nations
> at the epi-center of the crisis. "Suggested prices are really
> plunging for these commodities, which means that demand is falling,"
> he said ….(New York Times, page D1).
> __Because the producer price index measures only domestic goods, it
> captures just a portion of the good news on inflation. Prices for
> goods imported from Asian countries are falling steadily, and analysts
> say that increased competition from these low-priced imports could
> bump domestic prices even lower ….(Wall Street Journal, page A2).
> __War with a Middle East oil-producing nation looms, yet energy prices
> are near four-year lows, the opposite of what happened in 1990, when
> Iraq invaded Kuwait and crude oil prices soared, says USA Today (page
> 1B). Consumers don't mind. Falling crude oil prices have helped push
> gasoline and heating oil prices down. More important, plunging energy
> prices have been crucial in taming inflation, despite a robust U.S.
> economy and the lowest jobless rate in 24 years ….
>
> DUE OUT TOMORROW: Mass Layoffs in December 1997
>
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