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To: UnBelievable who wrote (53502)	6/9/2000 8:35:00 AM
From: UnBelievable	Read Replies (3) \| Respond to of 99985

+DJ US May Producer Prices Unchanged; Consensus +0.2% 06/09/2000 Dow Jones News Services (Copyright ¸ 2000 Dow Jones & Company, Inc.) (MORE) DOW JONES NEWS 06-09-00 08:30 AM DJ US May PPI Ex-Food & Energy +0.2%; Consensus +0.1% (MORE) DOW JONES NEWS 06-09-00 08:30 AM DJ US May PPI Energy Prices -0.5%; Ex-Energy +0.1% (MORE) DOW JONES NEWS 06-09-00 08:30 AM DJ US May PPI Intermediate Goods -0.1%; Core +0.1% (MORE) DOW JONES NEWS 06-09-00 08:30 AM DJ US May PPI Crude Goods +3.2%; Core -0.3% (MORE) DOW JONES NEWS 06-09-00 08:30 AM DJ US May PPI Auto Prices +0.9%, Biggest Since Sept '99 (MORE) DOW JONES NEWS 06-09-00 08:30 AM DJ US April PPI Unrevised At -0.3% (MORE) DOW JONES NEWS 06-09-00 08:30 AM =DJ Data Snap: May PPI Sends Murky Signals On Inflation ======================================================= May Producer Price Index !Surprise: Yes! Key Numbers: May Apr !Trend: Mildly! PPI Index: Unch -0.3% !Inflationary ! Core Index: +0.2% +0.1% ! ! Indermediate:-0.1% -0.1% !Consensus: ! !Overall +0.2%! ======================================================= By Joseph Rebello and Henry J. Pulizzi WASHINGTON (Dow Jones)--A surprising slump in energy prices kept overall producer prices stable in May, but core prices nevertheless accelerated, a development that is likely to worry both financial markets and the Federal Reserve. The Producer Price Index for finished goods was unchanged in May after declining 0.3% in April, the Labor Department said Friday. But the stability was due chiefly to a continuing decline in energy prices. Outside the volatile food and energy sectors, inflationary pressures intensified: core prices rose 0.2%, up from 0.1% in April. Those numbers surprised Wall Street, which had expected core prices to rise just 0.1%. Stock and bond prices are likely to decline Friday as a result. The increase in core prices, after all, suggests that inflationary pressures continue to build despite tentative signs of an economic slowdown. The Fed has raised the funds rate six times in the last year to prevent an outbreak of inflation, raising the key federal funds rate 1.75 percentage points to 6.5%. The increases haven't yet had a clear effect on inflation, but the economy is showing signs of slowing in response. The unemployment rate climbed to 4.1% in May, up from a 30-year low of 3.9% in April. And retail sales declined in April for the first time in 20 months. Those numbers have delighted Wall Street. Investors, betting the coming slowdown will keep the Fed from raising the funds rate above 7% this year, have rushed to buy stocks. They have also been betting that the Fed will opt to leave interest rates unchanged this month because of a possible slowdown. Friday's producer-price data could rekindle expectations of a June interest-rate increase. Fed policymakers still think the evidence of an economic slowdown is inconclusive, and one of them has suggested that even if the economy is slowing it will have to slow a lot more to end the risk of inflation. Fed Governor Laurence Meyer, in a speech in Boston Tuesday, said the central bank may need slow the economy to an annual rate below 4% if it is to eliminate inflationary pressures that have built up after years of rapid growth. Most forecasters expect the economy to grow as much as 5% this year. For now, he said, the evidence suggests inflationary pressures have increased slightly "in the last six to nine months." Still, the government's report Friday offered no conclusive evidence to support that claim. In annual terms, the Producer Price Index was up 3.9% at the end of May, the same rate as in April. Core producer prices were up 1.5% in annual terms at the end of May, up from 1.3% in April. The Labor Department attributed the stability in overall producer prices in May to declining energy prices, which account for 14% of the index. Energy prices fell 0.5% in May after a 4.1% decline in April. Residential electricity prices declined 0.5% after a 0.2% gain in April. But gasoline prices rose 1.3%, rebounding from an 11.7% drop in April. The government said wholesale food prices also declined in May, falling 0.2% after a 1% increase in April. Wholesale computer prices, meanwhile, continued to fall in May, declining 0.8% after 2.4% decline in April. Tobacco prices were unchanged for a second month in a row, but prescription-drug prices fell 0.3% in May after a 0.5% gain in April. Automobile prices rose 0.9%, the biggest gain since September 1999. Prices of unprocessed, or crude, goods rose 3.2%, rebounding from a 2.5% decline in April. Prices of intermediate goods decline 0.1% for the second month in a row. -By Joseph Rebello and Henry J. Pulizzi; 202-862-9279 (END) DOW JONES NEWS 06-09-00 08:30 AM