US April producer prices higher, economic activity slower

Stock markets around the world took a beating yesterday and the US economic data didn't help. Reuters reports the latter.

The Labor Department said the Producer Price Index rose 0.2 percent last month as food prices took a respite from their march upward and as gasoline costs, which usually climb sharply in April, fell after adjustment for seasonal swings.

However, core producer prices, which strip out volatile energy and food costs, increased by 0.4 percent -- twice the rate forecast on Wall Street.

Over the past 12 months, core prices have risen 3 percent, the largest gain since December 1991. Overall producer prices were up an even stiffer 6.5 percent.

U.S. stock prices fell as investors, already alarmed by a fresh record oil price notched on Tuesday near $130 per barrel, took further fright over the high core price gauge.

The Dow Jones Industrial Average closed down almost 200 points or more than 1.5 percent in New York...

The report suggested price pressures further back in the chain of production, with core crude goods up 7.9 percent...

A report from the Chicago Federal Reserve Bank showed weaker economic activity in April across a range of sectors. Its National Activity Index, compiled from an array of economic data, moved down to -1.17 from -0.98 in March.

However, Monday had provided some hopeful signs for the US economy. From Bloomberg:

The index of leading U.S. economic indicators rose in April for a second month, the first back-to- back gain since October 2006, signaling that the current slowdown will be short-lived.

The Conference Board's gauge increased 0.1 percent, better than forecast and matching the gain in March, the New York-based research group said today. The measure points to the direction of the economy over the next three to six months.