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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (52893)	6/2/2000 1:46:00 PM
From: Haim R. Branisteanu	Respond to of 99985

While it would be an overstatement to say that price pressures have abated, the recent release of the ECRI and FIBER indices of future inflation reveal evidence of moderating prices. ECRI?s Future Inflation Gauge declined by 1.76% to 122.7 in May, slightly below its eleven-year high of 124.9. FIBER?s Leading Inflation Index fell for the second consecutive month due to a continuing reversal in industrial prices as well as a strong trade-weighted dollar. These reports, combined with recent CPI, NAPM and U.S. Payroll Employment reports suggest that the economy may be cooling off, and that price pressures may be abating as a result. Analysis The ECRI FIG retreated from its eleven-year high in May, declining by 1.76% to 122.7 from an upwardly-revised April figure of 124.9. The FIBER Leading Inflation Index declined for the second consecutive month to 102.3 in May, from 105.8 in April and 106.1 in March. The ECRI measure of future inflation is more sensitive to labor market conditions and is reflecting a weaker labor market. The recent U.S. Payroll Employment Report shows that payroll employment fell by 126,000, net of census jobs, as the unemployment rate rose to 4.1% from 3.9%. Also, the monthly increase in average hourly earnings for May moderated to 0.1% from much higher recent levels. The FIBER Leading Inflation Index gives greater weight to industrial prices and is reflecting a continued trend of moderating commodity prices. This is reflected by the recent 13.4% fall in the NAPM price index which measures prices paid by manufacturing firms for intermediate goods. While it would be a mistake to place too much emphasis on one month?s report, these results, along with the recent releases for the CPI, NAPM survey and U.S. Payroll Employment Report, suggest a cooling economy that is being accompanied by moderating price pressures. These reports will provide arguing points for those who feel that the Federal Reserve should adopt a "wait and see" approach at its next FOMC meeting. dismal.com