WASHINGTON -- Wholesale inflation was flat in October, factory output rose slightly and homebuilder confidence held steady this month, according to government reports released Wednesday.
U.S. producer prices were unchanged in October as the price of services fell, another sign that inflationary pressure remains modest.
The Labor Department said Wednesday that its producer price index was flat last month after rising 0.3 percent in September. Services prices fell 0.3 percent, pulled down by a record 5.7 percent drop in the price of brokerage and other financial services. The services drop was offset by a 0.4 percent increase in the prices of goods, including a 2.5 percent increase in wholesale energy prices.
Core inflation, which strips out volatile food and energy prices, fell 0.2 percent in October.
The producer price index measures cost pressures before they reach consumers. Inflation has stayed well below the Federal Reserve's 2 percent annual target. Low oil prices -- well below $50 a barrel -- have helped keep inflation in check.
Over the past year, producer prices have risen 0.8 percent, modest but still the highest annual gain since December 2014. Core inflation was up 1.2 percent annually.
U.S. factory output increased in October, aided by greater production of automobiles, home electronics and appliances.
The Federal Reserve said Wednesday that manufacturing production improved 0.2 percent last month, matching the gain in September. The broader industrial production category, which includes mining and utilities, was flat as warmer weather reduced the demand for heating.
"People were worried that manufacturing is stalling out but it did get some modest growth," said David Sloan, senior economist at 4CAST-RGE in New York. "The outlook for manufacturing is getting better slowly."
Manufacturers have endured a brutal year that crimped sales and hiring. The relatively strong dollar made U.S. goods more expensive overseas, hurting exports, while low energy prices dried up demand for drilling equipment and pipelines. Businesses became cautious about investing in machinery.
The seeds of a rebound in factory output began this summer as manufacturers adapted to these obstacles. Still, over the past 12 months, factory production has fallen 0.2 percent.
Mining output rose 2.1 percent last month, though it has fallen 7 percent in the past year. Utility production tumbled 2.6 percent.
Separate reports suggest that manufacturing is slowly progressing back to full capacity.
The Institute for Supply Management says its manufacturing index came in at 51.9 in October. Anything above 50 signals growth. Production and export orders grew faster in October. A measure of factory employment rose last month after falling for three straight months.
U.S. homebuilders' confidence held steady this month, though their expectations for sales into next year dimmed slightly.
The National Association of Home Builders/Wells Fargo builder sentiment index released Wednesday was unchanged at 63. That's two points below September's reading, which was the highest in nearly a year, and up one point from a year ago.
Readings above 50 indicate more builders view sales conditions as good rather than poor. The index has been above 60 the past three months after hovering in the high 50s much of this year.
The latest builder sentiment index is in line with what analysts polled by FactSet were expecting.
Builders' view of current sales held steady from last month, while a gauge of traffic by prospective buyers edged higher. But their outlook for sales over the next six months declined slightly.
Even so, builders remain optimistic overall about new home sales, which are running ahead of last year's pace.
"Ongoing job creation, rising incomes and attractive mortgage rates are supporting demand in the single-family housing sector," said Robert Dietz, the NAHB's chief economist. "This will help keep housing on a steady, upward glide path in the months ahead."
Information for this article was contributed by Paul Wiseman, Josh Boak and Alex Veiga of The Associated Press and Shobhana Chandra of Bloomberg News.
Business on 11/17/2016