Wholesale Prices in U.S. Probably Rose in April on Oil Costs
by Veronica Stone on May 14th, 2009
By Bob Willis
May 14 (Bloomberg) — Prices paid to U.S. producers probably rose in April as oil costs rebounded, economists said before a report today.
The projected 0.2 percent increase in wholesale prices would follow a 1.2 percent drop in March, according to the median estimate of 68 economists surveyed by Bloomberg News. Another report may show the number of people claiming jobless benefits climbed last week from a three-month low.
Signs that the worst of the recession is over may boost commodity costs further, alleviating concern over deflation, or an extended drop in prices that hurts the economy. Along with the trillions of dollars pumped into the banking system by the Federal Reserve, increases in raw materials may stoke inflation once an economic recovery takes hold.
“It’s impossible to see how deflation can persist given the amount of liquidity in the system,” said Maxwell Clarke, chief U.S. economist at 4Cast.com in New York. “With oil moving back up, the thought in people’s minds becomes that inflation could ultimately become a problem that outweighs deflation.”
The Labor Department’s producer-price report is due at 8:30 a.m. in Washington. Economists’ forecasts ranged from a decline of 0.6 percent to a 1 percent gain.
Labor may also report at the same time that initial jobless claims rose to 610,000 in the week ended May 9 from 601,000 a week earlier, according to economists surveyed. The increase in applications probably reflects the closing of all Chrysler LLC assembly plants starting May 4 for at least 30 days while the automaker reorganizes under bankruptcy.
Recession Easing
Smaller declines in manufacturing and an easing in the housing slump indicate the worst recession in at least 50 years may be starting to abate.
The economy will probably shrink at a 1.9 percent annual pace this quarter after contracting at an average 6.2 percent rate in the prior six months, according to economists surveyed this month.
DuPont Co., the third-biggest U.S. chemical maker, and Dr Pepper Snapple Group Inc., the beverage maker spun off by Cadbury Plc last year, are among companies able to charge more. Wilmington, Delaware-based DuPont raised prices 5 percent on average in the first quarter and said demand will improve because most customers have used up inventories and are increasing purchases.
“We expect sales in the second quarter to be flat to slightly up from the first quarter,” Chief Executive Officer Ellen Kullman said on a call with investors on April 21.
Price Increases
Plano, Texas-based Dr Pepper Snapple yesterday reported first-quarter profit that beat analysts’ estimates and raised its 2009 forecast after increasing prices and cutting expenses.
“Markets and consumer sentiment appear to be on the mend,” Chief Executive Officer Larry Young said during a conference call with analysts.
Still, a report yesterday showed consumers aren’t yet totally out of the woods. Retail sales fell 0.4 percent in April after a 1.3 percent decline in March, according to data from the Commerce Department.
Producer prices are one of three monthly inflation gauges reported by Labor. Prices of goods imported into the U.S. rose 1.6 percent in April as petroleum costs surged, the government said yesterday.
Labor figures tomorrow may show consumer prices were unchanged last month after declining 0.1 percent in March, economists forecast. Excluding energy and food, prices probably rose 0.1 percent.
For their part, Fed policy makers are still more focused on the threat that prices will fall.
“In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued,” policy makers said after their April 29 meeting. Still, there remain “some risks that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.”
Bloomberg Survey
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PPI Core Core Initial
PPI PPI Claims
MOM% MOM% YOY% ,000’s
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Date of Release 05/14 05/14 05/14 05/14
Observation Period April April April 9-May
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Median 0.2% 0.1% 3.4% 610
Average 0.2% 0.1% 3.4% 610
High Forecast 1.0% 0.2% 3.6% 650
Low Forecast -0.6% -0.2% 3.3% 580
Number of Participants 68 65 18 38
Previous -1.2% 0.0% 3.8% 601
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Action Economics 0.3% 0.1% 3.4% 620
AIG Investments 0.8% -0.1% --- ---
Aletti Gestielle SGR 0.1% 0.1% --- 612
Ameriprise Financial Inc 0.3% 0.2% 3.5% 585
Argus Research Corp. 0.3% 0.2% --- ---
Bank of Tokyo- Mitsubishi 0.7% 0.1% --- 615
Bantleon Bank AG 0.3% --- --- ---
Barclays Capital 0.3% 0.2% 3.6% 627
BBVA 0.2% 0.1% --- 615
BMO Capital Markets 0.6% 0.2% 3.5% 610
BNP Paribas 0.0% 0.1% 3.5% 596
Briefing.com 0.2% 0.0% --- 580
Calyon 0.1% 0.1% --- ---
ClearView Economics 0.3% 0.1% --- ---
Commerzbank AG 0.2% 0.1% --- 610
Credit Suisse 0.4% 0.2% --- 590
Daiwa Securities America 0.0% 0.1% --- ---
Danske Bank -0.6% 0.2% 3.5% ---
DekaBank -0.1% 0.0% --- ---
Desjardins Group -0.2% 0.0% --- 610
Deutsche Postbank AG 0.2% 0.1% --- ---
DZ Bank 0.1% 0.2% --- ---
First Trust Advisors 0.2% 0.1% --- 609
Fortis 0.2% 0.0% 3.3% ---
FTN Financial 0.2% 0.0% 3.3% ---
Goldman, Sachs & Co. 0.0% -0.1% --- ---
Helaba 0.1% 0.1% --- 610
Herrmann Forecasting 0.3% 0.1% 3.5% 596
High Frequency Economics 0.5% 0.2% --- 590
HSBC Markets 0.1% 0.1% --- 600
IDEAglobal 0.1% 0.1% 3.4% 610
IHS Global Insight 0.0% 0.0% --- ---
Informa Global Markets 0.3% 0.1% --- 610
ING Financial Markets 0.0% 0.1% 3.4% 620
Intesa-SanPaulo 0.0% 0.1% --- ---
J.P. Morgan Chase 0.1% 0.1% 3.4% 650
Janney Montgomery Scott L 0.3% 0.2% 3.5% ---
Johnson Illington Advisor -0.1% 0.1% --- ---
Landesbank Berlin -0.1% -0.2% --- 610
Landesbank BW 1.0% --- --- ---
Lloyds TSB 0.2% 0.0% --- 595
Maria Fiorini Ramirez Inc 0.1% 0.0% --- 615
Merrill Lynch 1.0% 0.0% --- 605
Mizuho Securities -0.1% 0.0% --- 589
Moody’s Economy.com 0.2% 0.1% --- 611
Morgan Keegan & Co. 0.1% 0.2% --- ---
Morgan Stanley & Co. 0.1% 0.0% --- ---
Natixis -0.3% 0.1% 3.4% ---
Newedge 0.3% 0.1% 3.4% ---
Nomura Securities Intl. 0.3% 0.2% --- ---
PNC Bank 0.4% 0.2% --- ---
Raymond James -0.1% 0.1% --- 590
RBS Securities Inc. 0.6% 0.1% --- 650
Ried, Thunberg & Co. 0.1% 0.0% --- 625
Schneider Foreign Exchang 0.1% 0.2% --- 626
Scotia Capital 0.0% 0.1% --- 590
Societe Generale 0.0% 0.1% --- ---
Stone & McCarthy Research 0.1% 0.1% --- 615
TD Securities 0.4% 0.1% 3.5% 610
Thomson Reuters/IFR 0.1% 0.1% --- 605
UBS Securities LLC -0.1% 0.0% --- ---
Unicredit MIB 0.0% --- --- ---
University of Maryland 0.1% 0.1% --- ---
Wachovia Corp. -0.3% 0.1% 3.4% ---
Wells Fargo & Co. 0.3% 0.1% --- 620
WestLB AG 0.2% 0.1% 3.4% ---
Westpac Banking Co. 0.4% 0.2% --- 615
Wrightson Associates 0.2% 0.0% --- 625
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To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net
