BLS Daily Report, Thursday, March 14, 2002 RELEASED TODAY: The U.S. Import Price Index decreased 0.1 percent in February, the Bureau of Labor Statistics reports. The decline followed a 0.4 percent increase in January and was attributable to a decline in nonpetroleum prices. The Export Price Index was down 0.2 percent in February, the fifth consecutive decrease for this index.
The deficit in the nation's broadest measure of trade narrowed slightly to $417.4 billion last year, although it was the second highest imbalance on record, the Commerce Department said today. Last year's current account trade deficit, measuring the flow of not just goods and services but also investment across the U.S. border, was down by 6.1 percent from the all-time high of $444.7 billion set in 2000. It marked the first time that the current account had shown an improvement since a 7 percent decline to $109.9 billion in 1995. In another report, the Commerce Department said that businesses rebuilt inventories by 0.2 percent in January, the first increase in inventories in a year and another encouraging sign that the country's first recession in a decade has come to an end. Analysts see the rebuilding of inventories as a crucial development in lifting the country out of recessions. In a third report, the Labor Department said that the number of Americans filing new claims for unemployment benefits fell by 3,000 last week to 377,000. (Martin Crutsinger, Associated Press, http://www.nandotimes.com/business/story/303137p-2642587c.html). New claims for state unemployment insurance dropped by 15,000 last week to a seasonally adjusted 376,000, the Labor Department said today. The decline for the work week ending February 2 followed a revised 31,000 jump in claims the week before. Jobless claims slowly have been declining since peaking October 20 at 507,000. Last week's level was the lowest since January 19. The more stable 4-week moving average of new claims, which smoothes out week-to-week fluctuations, fell last week to 380,500, the lowest level since August 18. There have been growing signs that the nation's first recession in a decade is ending, and the Federal Reserve resisted cutting interest rates last week after doing so 11 times in 2001. But the job market will be the slowest to recover, and economists think the unemployment rate will continue to rise into the summer to as high as 6.5 percent. That's because the level of job growth in the early stages of the recovery probably will not be enough to accommodate new workers as they enter the job market (Leigh Strope, Associated Press). An important gauge of U.S. economic activity rose in January for the fourth consecutive month, suggesting the nation's economic turnaround is on solid footing and could be stronger than expected. The New York-based Conference Board said today that its Index of Leading Economic Indicators increased 0.6 percent in January to 112.2 following a revised 1.3 rise in December. The reading met analysts' expectations. "Given this string of strong increases, the cumulative rise in the index over the past 6 months...suggests gathering economic momentum," said the board's economist, Ken Goldstein. "The strong signal from the indicators is that the recession is ending and that the recovery could be more vigorous than earlier anticipated" (Lisi de Bourbon, Associated Press). A measure of U.S. manufacturing activity rose for the first time in a year and a half in February, as a rise in orders and increased production helped lift the bruised sector out of its slump. The Tempe, Ariz.-based Institute for Supply Management, formerly known as the National Association of Purchasing Management, said its index of business activity rose to 54.7 in February from 49.9 in January. Analysts had been expecting a reading above 50 for the first time since July 2000. An index above 50 signifies expansion, while a figure below 50 shows contraction (Lisi de Bourbon, Associated Press). U.S. business inventories rose for the first time in a year in January, and sales rose too, the government said today. Total business sales rose 1.1 percent on the month after posting an unchanged outcome in December. Sales at manufacturers rose 2.0 percent (Reuters, http://www.washingtonpost.com/wp-dyn/articles/A26041-2002Mar14.html). The nation's arbiter of recessions said that the economy may be turning the corner, adding official weight to recent upbeat economic data and the growing consensus among economists that a recovery is underway. The nonprofit National Bureau of Economic Research stopped short of declaring the recession over, but the group, which pinpoints the peaks and valleys of the U.S. business cycle, cited the improving employment picture as evidence that the downturn may be ending. The Labor Department reported last week that the nation added 66,000 jobs in February, the first employment gain in 7 months. Also noting improvements in manufacturing, sales, and other sectors, the NBER said in a memorandum posted on its Web site: "The decline in activity that began last year may be coming to an end." The NBER, which declared in the fall that the U.S. went into recession in March, is likely to collect and review data for several months before officially calling its end (The Wall Street Journal, page A2). More than 60 U.S. cities, counties or public agencies have adopted a living wage policy since 1994, despite critics who argue paying more than the Federal $5.15 per hour minimum leads to layoffs while benefiting only a fortunate few who keep their jobs. A national study conducted by the San Francisco-based Public Policy Institute of California said cities like San Francisco that boost minimum wages above the federal floor are reducing poverty rates for the working poor, even as they increase unemployment. The new study may encourage living wage advocates -- not the least because its author is a noted minimum wage critic. "Living wages actually reduce poverty," says author David Neumark, an economics professor at Michigan State University. Living wage ordinances often are not as radical as they sound. None of them applies to all workers in a city -- most cover only city employees or private firms with significant government contracts. And Neumark said the average pay raise equals around 3.5 percent, though it may be significantly higher for some workers. Urban poverty rates fell from 1996 through 2000, the span Neumark studied using Census Bureau data. The living wage accelerated the drop in those cities, he said (Justin Pritchard, Associated Press, Nando Times, Nancy Cleeland, The Los Angeles Times). Consumers spent more in February as retail sales increased 0.3 percent, bringing the total to a seasonally adjusted level of $296.41 billion. The increase follows a 0.3 percent drop in January, according to Census Bureau figures ( Daily Labor Report, page D-1). DUE OUT TOMORROW: Producer Price Indexes--January 2002
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