Prices take a jump
A measure of U.S. wholesale prices rose in February by the most in five months, pushed higher by more expensive gas and pharmaceuticals. But outside those increases, inflation was mild.
The producer price index grew a seasonally adjusted 0.7 percent in February from January, the Labor Department said Thursday. That’s up from 0.2 percent in the previous month. Wholesale gas prices increased 7.2 percent.
Even with the increase, wholesale prices have risen just 1.7 percent in the past 12 months. That’s below the Federal Reserve’s 2 percent inflation target. Mild inflation gives the Fed more latitude to continue with its aggressive policies to spur more economic growth.
The index measures the cost of goods before they reach consumers. Wholesale prices are what manufacturers and farmers receive for their products from retailers and distributors.
Excluding volatile food and energy costs, core wholesale prices rose only 0.2 percent last month. In the past 12 months, core prices have increased 1.7 percent.
Higher pharmaceutical costs accounted for 20 percent of the increase in core prices last month. Car and pickup truck prices also rose.
Wholesale food prices fell 0.5 percent last month, led by an 18 percent drop in vegetable costs, the most in nearly two years. The price of broccoli, cauliflower and lettuce all fell sharply.
Gas prices have soared this year after falling at the end of 2012. The national average price for a gallon of gas jumped from $3.42 on Jan. 31 to $3.78 on Feb. 28.
Since then, however, gas prices have come down a bit. They averaged $3.70 a gallon Wednesday.
Mortgage rates highest in seven months
The average U.S. rate on the 30-year fixed mortgage rose this week to its highest level in seven months but remains near historic lows. Low mortgage rates have helped support the gradually recovering housing market.
Freddie Mac said Thursday that the average rate for the 30-year fixed loan rose to 3.63 percent from 3.52 percent last week.
It’s the highest rate since August. But it’s still near the 3.31 percent reached in November, which was the lowest on records dating to 1971.
The average rate on the 15-year fixed mortgage rose to 2.79 percent, up from 2.76 percent last week. The record low is 2.63 percent.
Jobless benefits decline
Fewer Americans sought unemployment aid last week, reducing the average number of weekly applications last month to a five-year low. The drop shows that fewer layoffs are strengthening the job market.
The Labor Department said Thursday that applications fell 10,000 to a seasonally adjusted 332,000. That cut the four-week average to 346,750, the lowest since March 2008, just several months after the Great Recession began.
The report “provides further evidence of a gradual strengthening in labor market conditions,” Paul Dales, senior U.S. economist at Capital Economics, said in a note to clients.
Applications are a proxy for layoffs. They have fallen nearly 13 percent since November.
At the same time, net hiring has picked up. Employers have added an average of 200,000 jobs per month from November through February, up from about 150,000 a month in the previous four months.
Confidence among consumers climbed for a sixth straight week to the highest level since April as a rally in stock prices and improving job market boosted Americans’ view of their finances.
The Bloomberg Consumer Comfort Index advanced to minus 31.6 in the week ended March 10 from minus 32.4 in the prior period. The gauge of personal finances reached an eight-month high.
A pickup in employment and the longest rally in the Dow Jones Industrial Average since 1996 may keep lifting sentiment, sustaining the unexpected strength in consumer spending seen so far this year. Gains in asset values, including the rebound in home prices, shows Federal Reserve stimulus policies aimed at helping Americans repair tattered finances are paying off.
Diabetes drug probe
The Food and Drug Administration is looking into new evidence that a group of recently approved diabetes drugs can increase the risk of pancreatitis and other problems.
The agency said Thursday samples of pancreas tissue taken from a small number of patients showed inflammation of the pancreas and cellular changes that often precede cancer. Academic researchers took the samples from diabetes patients who were taking the new medications, after they died from various causes.
The details of the research have not yet been published, but the agency said in an online statement it is seeking more information.
The drugs under review come from a wave of recently approved diabetes medications, including Merck & Co. Inc.’s Januvia and Janumet, Novo Nordisk’s Victoza and Bristol-Myers Squibb’s Byetta and Bydureon, among others. All the drugs mimic a natural hormone that the body usually produces to spur insulin production after a meal.
Natural gas prices rise
Near-record natural gas demand from U.S. electricity generators is driving prices back up toward $4 for the first time since September 2011 even as output climbs to an all-time high for the sixth straight year.
Producers including Duke Energy Corp., NRG Energy Corp., Southern Co. and Dynegy Inc. say they plan to run their gas- fired units this year at close to the top rates of 2012. Plants burned 24.96 billion cubic feet of gas a day last year, up 4.21 billion from a year earlier and a bigger gain than in the five previous years combined. Gas futures have rebounded 94 percent since trading at a 10-year low last April as utilities switched from coal and unusually hot weather spurred cooling demand.
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