PPI RISES 2.4 PERCENT IN PAST YEAR

YEARLY RETAIL SALES IN FOUR-MONTH UPTREND

FOUR-WEEK JOBLESS CLAIMS AVERAGE RISES

The Labor Department's Bureau of Labor Statistics announced today that the Producer Price Index (PPI) for Finished Goods rose 0.5 percent during March.

The finished goods PPI is a measure of the selling prices of goods when they are first ready for sale to the ultimate consumer. It does not include costs of transportation and distribution and retail sales. The PPI covers prices received by the manufacturing, mining, agriculture, forestry, fishing, natural gas, and electrical power industrial sectors.

The PPI change for March reduces to just +0.1 percent when the effects of the volatile food and energy sectors are removed. Month-to-month changes in food and energy prices are sometimes large. So, on a month-to-month basis, it is common practice to subtract the contributions of these components and examine the resulting "core" rate change.

On a year-to-year basis, the variations in food and energy tend to average out. So, the 12-month change in the PPI for all finished goods provides a meaningful measure of producer price changes. For the year ending March 1996, the finished goods PPI rose 2.4 percent.

Also today, the Commerce Department's Bureau of the Census released its advance estimate of seasonally-adjusted retail sales for February. In February, retail sales rose by 0.8 percent, the biggest gain in eight months. This follows a revised drop of 0.1 percent in January. New car sales led the way, advancing by 2.1 percent. New car sales are highly variable and, on average, account for about 1/4 of all retail sales. So month-to-month changes in this component can cause wide swings in the total retail sales figure. Excluding the contribution of volatile auto sales, February was up 0.4 percent from January, and the January change was -0.2 percent.

Sales by general merchandise stores posted their biggest gains since January 1995, rising 2.3 percent. This followed a rise of only 0.2 percent in January.

Year-over-year, retail sales posted a 5.0 percent gain. During the past four months, this year-to-year indicator has been trending upward.

The Labor Department reported today that new claims for unemployment insurance fell by 59,000 during the week ending April 6. The less-variable four-week moving average of new claims was still strongly influenced by the GM strike and stood at 393,000, slightly lower than the preceding reading of 394,750. The trend of the four-week moving average is still up.

Byline: Lafferty (MF Merlin)