BLS DAILY REPORT, TUESDAY, JANUARY 17, 2001
The Producer Price Index for Finished Goods was unchanged in December from
the prior month as higher prices for consumer goods and capital equipment
were offset by lower energy prices, the Bureau of Labor Statistics reports.
The core PPI, which excludes volatile food and energy prices, rose 0.3
percent in December on rising prices for cars, light trucks, and civilian
aircraft. ... A senior economist at Merrill Lynch in New York said he found
the core PPI's growth surprising, but he expects producers to begin
discounting more items as the economy continues to slow, possibly bringing
the core PPI back down. The core PPI's growth rate has remained in a narrow
range throughout 2000, varying between a low of a 0.2 percent decline and a
high of 0.3 percent gain. ... (Brett Ferguson in Daily Labor Report, page
D-4).
A surprise uptick in auto dealership sales helped retail sales inch ahead
0.1 percent in December, but sales in October and November were revised
down, the Commerce Department reports. ... A spokesman for Economic
Analysis Associates Inc. in Greenwich, Conn., attributed the surprise growth
in auto sales to a problem with seasonal adjustment factors. Christmas
falling on a Monday gave shoppers two extra days in the malls and on the
streets. But then there were several down days because of severe winter
weather in the Northeast. ... (Daily Labor Report, page D-14)_____Retail
sales are likely to continue their slump for the first 6 months of 2001,
analysts and industry leaders predicted at the National Retail Federation's
annual convention in New York. The chief economist for the retail
federation predicts that the economy and consumer spending will start to
pick up by the second half of the year, saying the Fed's interest rate cuts
will eventually spark consumer spending (Washington Post, page E2).
__Retail sales increased a mere 0.1 percent last month, the Commerce
Department reported, a weak performance but nevertheless an indication that
consumer spending hasn't collapsed, analysts said. "Slowing job growth,
higher energy prices and declining equity values are taking a toll on
consumers, says a Merrill Lynch & Co. economist in New York. ... Meanwhile,
BLS said producer prices for finished goods were unchanged last month after
rising 0.1 percent in November. ... (John M. Berry in Washington Post, Jan.
13, page E1).
__Retail sales, while clearly weak, defied gloomy expectations and rose
slightly in December, ending a week in which economic data showed some
surprising resilience. The retail numbers -- combined with other reports on
inflation, mortgage applications, and unemployment claims -- have decreased
the chances that the Federal Reserve will lower interest rates by another
half-point at its next meeting, scheduled for January 30-31. ... The Bureau
of Labor Statistics said that the prices that dealers pay for cars and light
trucks rose last month. The overall Producer Price Index -- which measures
the cost that manufacturers charge for their goods -- was flat last month
and finished the year up 3.5 percent, largely because of rising energy
costs. The core index -- which excludes the volatile energy and food sectors
-- rose 0.3 percent in December, causing some alarm among economists that
inflation remains a threat and that the Fed will be reluctant to cut rates.
But for all of 2000, the core index grew just 1.2 percent, only slightly
faster than in 1999 and about half its pace in 1998. "One month doesn't
make a trend," said Brian Catron, an economist at the Bureau of Labor
Statistics, which compiles the index. ... (David Leonhardt in New York
Times, Jan. 13, page B1).
__The old year went out with a whimper for retailers, and the slump in the
overall economy may persist well into the new one. ... The upward creep in
sales at the end of a lackluster holiday season hardly dispelled fears of a
sharp slowdown in economic growth. ... The report on wholesale prices was
largely positive, though it held a bit of a surprise. While the producer
price index was unchanged in December from November, the important core rate
-- which excludes the volatile food and energy categories -- rose 0.3
percent last month, its biggest jump since May. ... (Nicholas Kulish in
Wall Street Journal, Jan. 15, page A2).
Based largely on strong labor demand in many industries, the Wage Trend
Indicator reversed direction in the fourth quarter to show renewed pressures
on wages at least through the middle of this year, according to the latest
figures released by BNA. ... The index declined slightly in the third
quarter of last year from the prior quarter, only to reverse direction in
the final quarter. ... (Daily Labor Report, page D-1).
The vice chairman of the Federal Reserve, Roger W. Ferguson Jr., said today
that the central bank's surprise decision last week to cut interest rates
sharply was not based on any nonpublic information about economic or
financial problems. ... He hinted that tumbling stock prices had played
some role in the decision. But he seemed intent on tamping down speculation
that the Fed had cut rates on the basis of some secret information or as yet
unpublicized trouble in the financial system. ... (New York Times, Jan. 13,
page B3).
The slowdown in economic growth threatens to reduce the size and clout of
the nation's unions. After 9 years of economic prosperity that failed to
reverse a long decline in union ranks, many organized labor leaders predict
their ranks will shrink again as the economy cools. That is because the
first workers laid off in an economic downturn typically come from union
strongholds in manufacturing, particularly its automotive sector. ... Two
charts are attributed to the Bureau of Labor Statistics and show union
membership job cuts by industry (Yochi J. Dreazen in Wall Street Journal,
page A2).
The Internet economy added more than 612,000 jobs in the first half of last
year and directly supports roughly 3 million workers, according to a study
prepared by the University of Texas Center for Research in Electronic
Commerce and commissioned by Cisco Systems. Seven out of every 10 of these
jobs are traditional, rather than high-tech, according to the study, the
fourth such report prepared by the university. Only 28 percent of the jobs
are in information technology, which ranks below sales and marketing (33
percent) as the job function generating the most Internet-related
employment. Other categories are operations/manufacturing (17 percent),
accounting and finance (12 percent), and general/administrative/executive
(10 percent). ... Because the study covers only the first half of 2000, its
findings do not reflect the sharp slowdown in the U.S. economy or the demise
of many dot-coms that have occurred since. ... (Daily Labor Report, page
A-7).
DUE OUT WEDNESDAY:
Consumer Price Index -- December 2000
Real Earnings: December 2000
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