Associated Press photos A worker carries interior doors to install in a new home in north Dallas. U.S. construction projects posted the biggest gain in nine months, with nonresidential and government projects offsetting weakness in home construction.
Work continues on a plan of new homes in Franklin Park, Pa. An overall picture of the economy shows modest gains and inflation remaining tame.
Thursday, March 14, 2019 1:00 am
Slight gains keep inflation tame
WASHINGTON – U.S. wholesale prices barely increased last month after falling for three straight months, a sign there is little inflation pressure in the economy.
The Labor Department says the producer price index – which measures price changes before they reach the consumer – rose 0.1 percent in February. It slipped 0.1 percent in January. Excluding volatile food and energy costs, core producer prices also rose 0.1 percent. Wholesale prices increased 1.9 percent from a year earlier, and core prices rose 2.5 percent.
Despite an unemployment rate near a five-decade low and faster wage growth, inflation is tame. The consumer price index, released Tuesday, increased just 1.5 percent in February from a year ago. Mild inflation is a major reason the Federal Reserve has paused its interest rate hikes.
Multiple reports were released Wednesday, painting a picture of the economy so far this year.
Spending on U.S. construction projects in January posted the biggest gain in nine months, the Commerce Department said. Strength in nonresidential construction and government projects offset continued weakness in home construction.
The Commerce Department said construction spending rose 1.3 percent in January following two months of declines. It was the biggest gain since spending was up 1.7 percent in April. Spending on residential projects fell 0.3 percent in January, the sixth consecutive monthly decline for a sector that was hurt last year by rising mortgage rates and higher home building costs.
Spending on nonresidential construction increased 0.8 percent in January with spending on office buildings, hotels and the category that covers shopping centers all showing gains.
Spending on government projects jumped 4.9 percent, the biggest increase since March 2004. The January strength reflected a 4.9 percent rise in spending on state and local building projects and a 4.2 percent rise in federal construction spending.
It pushed total public construction spending to a seasonally adjusted annual rate of $313.6 billion, the highest level since September 2010.
A third report said orders to U.S. factories for big-ticket manufactured goods edged up slightly in January, but the strength came from a big increase in the volatile aircraft category. In encouraging news for future growth, a key category that tracks business investment plans posted its biggest gain in six months.
The Commerce Department said orders for durable goods rose 0.4 percent in January, led by a 15.9 percent rise in orders for commercial aircraft. The category that serves as a proxy for business investment rose 0.8 percent after two months of declines. It was the biggest gain since a 1.5 percent July bump.
The weakness in business investment has puzzled economists who expected to see strength in this area as companies boosted investment spending.