Confidence Falls; Prices Increase
High fuel costs and war fears knocked American consumer confidence to its lowest level in more than a decade, but inflation -- except in the energy sector -- is under control, reports said Friday.
A separate report showed that manufacturing activity is struggling to find its feet.
The University of Michigan said its preliminary March index of consumer sentiment fell to 75, the lowest level since October 1992, pulled down by rising energy prices, job worries, stock market weakness and general war jitters.
“It’s not a surprise with the increase in gasoline prices,” said Lynn Reaser, chief economist at Banc of America Capital Management in St. Louis. “That has a big psychological impact on confidence, along with the current geopolitical situation.”
Surging energy costs were behind a 1% rise in producer prices in February. The Labor Department report said prices, excluding volatile food and energy costs, fell 0.5%, indicating that inflation remains under wraps.
The largest decrease in light-truck prices since February 1982 helped pull down the core rate of inflation, while a 7.4% rise in the price of finished energy goods kept the overall number high.
A separate report from the Federal Reserve showed a slight uptick in industrial production. The Fed said output rose 0.1% in February, contrasted with the 0.1% dip expected by analysts.
But much of that rise was because of a 1.3% climb in utility output, the likely result of severe winter weather in the Northeast.
Manufacturing activity, which makes up more than four-fifths of overall production, dipped 0.1%, its first decline since December, reflecting the decline in auto production in the month.
Meanwhile, the Commerce Department said business inventories grew slightly in January, in part from a rise in the number of cars on dealer lots. Inventories at retailers, manufacturers and wholesalers rose 0.2% in January.
At the same time, sales climbed 1.2%, helping to push the stock-to-sales ratio, a measure of how long it would take to deplete inventories at the current sales pace, down to a near-historical low of 1.36 months.
