Producer prices sink 1.9%, the biggest drop on record, while new jobless claims edge lower.
May 15, 2003: 9:11 AM EDT
NEW YORK (CNN/Money) - Wholesale prices fell 1.9 percent in April, the biggest drop on record, the government said Thursday, while new jobless claims fell.
The Labor Department said its producer price index (PPI), a measure of wholesale prices, fell 1.9 percent -- the biggest drop since the department began tracking the numbers -- after rising 1.5 percent in March .
The so-called core PPI, which excludes often volatile food and energy prices, fell 0.9 percent after rising 0.7 percent in March. Economists, on average, expected PPI to fall 0.6 percent and core PPI to fall 0.1 percent, according to Reuters.
The department said separately that the number of Americans filing new claims for unemployment benefits fell to 417,000 in the week ended May 10 from a revised 430,000 the prior week. Economists, on average, expected 425,000 new claims, according to a Reuters poll.
U.S. stock market futures moved higher after the reports, pointing to a positive opening on Wall Street. Treasury bond prices were mixed.
The PPI report came about a week after Federal Reserve policy makers warned of the risk of deflation, which is the opposite of inflation, in which prices fall uncontrollably, hurting corporate profits and leading to an economic slowdown.
Japan, the world's second-largest economy, has suffered from deflation for the better part of the past decade, with policy makers seemingly unable to stop the bleeding.
The Fed has indicated it was willing to take whatever steps necessary -- including cutting short-term rates or buying longer-term Treasury bonds -- to avoid deflation in the United States, and Thursday's report likely gave hope to traders expecting Fed action.
Much of the drop in headline prices was due to a retreat in energy prices after the end of the U.S.-led war with Iraq, but other prices also fell, including men's clothing, passenger cars and light trucks, tobacco products and jewelry.
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