According to the market report wholesale prices had fallen for the fourth straight month on February on the weak trade margin. According to the market experts, the tame inflation is responsible for eagerly waiting rate hike in June by the Federal Reserve.
In a statement on Friday, the U.S. Labor Department said, as the profit margin in service sectors were squeezed and transportation & warehousing cost fell the producer price index for final demand declined 0.5 percent. In a statement Millan Mulraine, Deputy Chief Economist at TD Securities in New York said, “The underlying message appears to be that pipeline inflationary pressures remain quite weak, even as energy prices have stabilized and gasoline prices have drifted modestly higher”.
According to the market data, the PPI fell 0.8 percent. Producer’s prices fell 0.6 percent in the last twelve months through February. In a statement the economists have forecasted a 0.3 percent rise in the PPI last month. Market data has also revealed that, Prices for U.S. government debt gained marginally on the inflation data.
The market experts also said that, the U.S. stock indexes are also falling sharply as the strong Dollar is taking away the profits of multinational companies. According to market analysts energy firms like Chevron Corp and Noble Corp are also loosing profit margin because of plummeting oil prices.
In a statement Chris Rupkey, Chief Financial Economist at MUFG Union Bank in New York said, “We would not take the producer prices report as a sign that the economy is secretly rotten if you pull back the tarp and take a look at the hull. The economy is creating millions of jobs”.
In a separate report by the University of Michigan revealed that the consumer sentiment index fell 4.2 points to 91.2 in early March. According to the report, bad weather in recent months had also left the middle and lower income people with high utility bill and general business activity. According to the reports, the economists are estimating a first-quarter GDP growth range as low as a 1.2 percent annual rate and as high as a 2.2 percent rate. But it was also reported that in the fourth quarter the U.S. economy expanded at a 2.2 percent rate.
According to the report, the volatile trade services component, which generally reveals profit margins at retailers and wholesalers, fell a record 1.5 percent in February. According to the experts, 13.4 percent drop in profit margin in gas station is the main reason behind it. Profit margin for apparel, footwear, jewelry retailers, food and alcohol had also fallen. According to the market analysts, because of strong Dollar there were decline in profit in machinery, equipment, parts and supplies wholesale margins.
