Wholesale Prices Drop More Than Expected In July

Wholesale prices fell sharply again in July, capping off a record 12-month plunge, while new housing starts for the month also dropped unexpectedly, underscoring the shakiness of any economic recovery.

Wholesale prices paid by retailers dropped 0.9 percent last month, led by big decreases in energy and food costs, according to the Labor Department. The figure is triple the decline most economists had expected. Over the past 12 months, wholesale prices have fallen 6.8 percent. They had been forecast to decline by 5.9 percent.

Core producer prices, which exclude food and energy costs, edged 0.1 percent lower in July compared with a forecast for a 0.1 percent rise, and after a 0.5 percent increase in June.

In June, overall wholesale prices increased 1.8 percent.

The Commerce Department on Tuesday reported an unexpected fall in new housing starts and permits, pulled down by steep declines in apartment and condominium construction. Construction of single-family homes experienced an uptick.

Housing starts fell 1 percent to a seasonally adjusted annual rate of 581,000 units, well below market expectations for 600,000 units. June's housing starts were revised up to 587,000 units from the previously reported 582,000 units. Multifamily unit starts tumbled 13.3 percent in July.

Groundbreaking for single family homes the worst-hit part of the housing market, rose 1.7 percent to an annual rate of 490,000 units, the highest since October.

Compared to July 2008, housing starts were down 37.7 percent.

The latest data add to a mix of economic figures that offer no clear path to recovery from the longest U.S. recession since the Great Depression. While stifling demand, the downturn has kept inflation in check despite a massive government stimulus effort.

Also Tuesday, Home Depot, the nation's largest home improvement retail chain, reported that its fiscal second-quarter profit fell 7 percent. That still beat Wall Street's expectations, and the company lifted its guidance for full-year earnings from continuing operations.

The retailer earned $1.12 billion, or 66 cents per share, for the period ended Aug. 2. That's down from $1.2 billion, or 71 cents per share, a year earlier. Excluding charges related to the closure of its Expo Design Centers the company's profit was 67 cents per share.

From wire service reports.

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