June wholesale prices slip 0.3%
Drops in energy, food lead way; production falls
WASHINGTON -- Wholesale prices and industrial production took a slide in June, suggesting the economy hit a rough patch and the Federal Reserve can stick with its gradual approach to raising interest rates.
The 0.3 percent drop in the Labor Department's producer price index -- the biggest decline in 13 months -- largely stemmed from a retreat in food and energy costs. These costs, which had been surging, had helped to push up wholesale prices by 0.8 percent in May. But June's decrease also reflected sluggish demand, which made some companies more restrained in their pricing, economists said.
The Fed, in a separate report yesterday, said production at US factories, mines, and utilities also fell 0.3 percent in June from the previous month. That was the largest decrease since April 2003 and marked a sharp slowdown from May's 0.9 percent advance.
''The economy hit a speed bump in June," said Ken Mayland, president of ClearView Economics. Still, he and other economists believed it was just a temporary hitch, not a sign of new economic troubles ahead.
Factory output dipped 0.1 percent last month, restrained by a cutback in automobile production. Jerry Jasinowski, president of the National Association of Manufacturers, called the decline ''a predictable breather following robust growth in preceding months."
Output at utilities declined 2.3 percent as temperatures returned to more normal levels after being unseasonably high in May, the Fed said.
On Wall Street, the Dow Jones industrials lost 45.64 points to close at 10,163.16.
In other economic news:
New claims for unemployment benefits jumped last week by a seasonally adjusted 40,000 to 349,000, the Labor Department said. In the prior week, claims plunged by 40,000. A portion of last week's increase was due to layoffs associated with temporary shutdowns at automobile plants to retool for new models, a department analyst said.
Businesses, trying to keep a close eye on customer demand, boosted inventories 0.4 percent in May, down from a 0.7 percent increase in April, the Commerce Department said.
On the inflation front, ''core" wholesale prices -- which exclude energy and food prices -- rose 0.2 percent in June, slightly less than May's 0.3 percent advance.
Energy prices, after soaring 1.6 percent in May, declined 1.6 percent in June. Food prices, which jumped 1.5 percent in May, declined 0.6 percent in June.
