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China rips U.S. on debt-rating downgrade

kum01049 — Mon, 08 Aug 2011 04:30:28 GMT

"The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone,” China’s state-run Xinhua News Agency said Saturday, in Beijing’s first official response to the S&P action, according to wire service reports.

"China, the largest creditor of the world’s sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China’s dollar assets,” it said.

Xinhua said the U.S. must slash its "gigantic military expenditure and bloated social welfare costs” and accept international supervision over U.S. dollar issues.

In cutting its rating of long-term U.S. government debt to AA+, a level below its top-ranked AAA, for the first time, S&P late Friday pointed to the "gulf between the political parties” for reducing its confidence in the government’s ability to oversee its finances.

The S&P, one of three major rating agencies, also said the outlook is negative, with the agency warning of another reduction in two years. Read text of S&P downgrade .

Japan, the second-biggest creditor to the United States, voiced support for its longstanding ally, with a senior Japanese government official saying the trust held in U.S. Treasury notes "and their attractiveness as an investment will not change because of this action,” Dow Jones reported.

But the chief economic adviser to India’s finance ministry said the downgrade has negative implications for the global economic outlook.

"This is a warning signal whether you are in New York, New Zealand or New Delhi,” Kaushik Basu told Dow Jones.

After the S&P action, the U.S. Treasury quickly criticized the move, saying S&P’s analysis provided to the department Friday afternoon contained a sizable error, which overstated the U.S. debt by $2 trillion. See MarketWatch topics: Debt Ceiling

And, in a statement issued after the S&P action, the Federal Reserve said the rating agency’s move would not alter the risk weights for U.S. Treasury securities or others issued or backed by the U.S. government.

In a statement released by spokesman Jay Carney and reported by the Associated Press, President Barack Obama said the negotiations that led to this week’s agreement to hike the U.S. debt ceiling "took too long” and were "at times too divisive.”

Investor impact

While some investors may be constrained to have only AAA paper in their portfolios, the fact that Moody’s and Fitch have not moved to downgrade the government could lessen any market impact.

Equities could react negatively to the downgrade but "a Treasury sell-off is extremely unlikely,” wrote analysts at Commerzbank, who noted in times of turmoil, U.S. Treasury notes would still be "the place to go.”

"A weakened economic environment in which there are little alternatives to U.S. Treasurys will support the market in the immediate,” agreed Dan Greenhaus, chief global strategist at BTIG LLC, in an emailed note Saturday.

Belgium, Italy, Spain, Japan, Canada and Ireland are among the AAA sovereigns that have been downgraded, with most if not all of the instances having little impact on yields outside of an immediate spike, noted Greenhaus.

The downgrade could ultimately prove fruitful, if Canada’s experience is any guide, the analyst said. Faced with serious economic troubles in 1994, the country took steps to balance its budget and create conditions conducive to job growth. By 1997, Canada had moved its budget deficit to a surplus and regained its AAA rating.

"There are certainly economic differences between Canada in the mid-1990s and the U.S. today but conceptually, to the extend the loss of the AAA rating sparks serious action by policy makers, this could help the country address the longer-term issues,” said Greenhaus.

S&P on April 18 warned the U.S. government risked losing its AAA rating held since 1941 unless lawmakers negotiated a plan by 2013 to cut budget deficits and the nation’s red ink, with anything less than $4 trillion in cuts threatening the rating.

But the timing of the S&P action was surprising, given the assumption that the rating agency would have allowed lawmakers time to "work or not work before stepping in,” Greenhaus said.

Yet the analyst expressed hope the downgrade would ultimately prove useful, saying "the U.S. is on an unsustainable fiscal path, the way forward is clear and the hope is this announcement spurs policy makers into action.”

Nonfarm payrolls rose 18,000 last month, far less than expected

kum01049 — Fri, 08 Jul 2011 14:08:55 GMT

Employment Situation Summary

Transmission of material in this release is embargoed USDL-11-1011
until 8:30 a.m. (EDT) Friday, July 8, 2011

Technical information:
 Household data: (202) 691-6378 * cpsinfo@bls.gov * www.bls.gov/cps
 Establishment data: (202) 691-6555 * cesinfo@bls.gov * www.bls.gov/ces

Media contact: (202) 691-5902 * PressOffice@bls.gov


 THE EMPLOYMENT SITUATION -- JUNE 2011


Nonfarm payroll employment was essentially unchanged in June (+18,000), and the 
unemployment rate was little changed at 9.2 percent, the U.S. Bureau of Labor 
Statistics reported today. Employment in most major private-sector industries 
changed little over the month. Government employment continued to trend down.

Household Survey Data

The number of unemployed persons (14.1 million) and the unemployment rate (9.2 
percent) were essentially unchanged over the month. Since March, the number of 
unemployed persons has increased by 545,000, and the unemployment rate has 
risen by 0.4 percentage point. The labor force, at 153.4 million, changed 
little over the month. (See table A-1.)

Among the major worker groups, the unemployment rates for adult men (9.1 percent), 
adult women (8.0 percent), teenagers (24.5 percent), whites (8.1 percent), blacks 
(16.2 percent), and Hispanics (11.6 percent) showed little or no change in June. 
The jobless rate for Asians was 6.8 percent, not seasonally adjusted. (See tables 
A-1, A-2, and A-3.)

The number of persons unemployed for less than 5 weeks increased by 412,000 in 
June. The number of long-term unemployed (those jobless for 27 weeks and over) 
was essentially unchanged over the month, at 6.3 million, and accounted for 44.4 
percent of the unemployed. (See table A-12.)

The civilian labor force participation rate was little changed in June at 64.1 
percent. The employment-population ratio decreased by 0.2 percentage point to 58.2 
percent. (See table A-1.)

The number of persons employed part time for economic reasons (sometimes referred 
to as involuntary part-time workers) was essentially unchanged in June at 8.6 
million. These individuals were working part time because their hours had been 
cut back or because they were unable to find a full-time job. (See table A-8.)

In June, 2.7 million persons were marginally attached to the labor force, about 
the same as a year earlier. (These data are not seasonally adjusted.) These 
individuals were not in the labor force, wanted and were available for work, and 
had looked for a job sometime in the prior 12 months. They were not counted as 
unemployed because they had not searched for work in the 4 weeks preceding the 
survey. (See table A-16.)

Among the marginally attached, there were 982,000 discouraged workers in June, 
down by 225,000 from a year earlier. (These data are not seasonally adjusted.) 
Discouraged workers are persons not currently looking for work because they 
believe no jobs are available for them. The remaining 1.7 million persons 
marginally attached to the labor force in June had not searched for work in the 
4 weeks preceding the survey for reasons such as school attendance or family
responsibilities. (See table A-16.)

Establishment Survey Data

Total nonfarm payroll employment was essentially unchanged in June (+18,000). 
Following gains averaging 215,000 per month from February through April, 
employment has been essentially flat for the past 2 months. Employment in most 
major private-sector industries changed little in June, while government 
employment continued to trend down. (See table B-1.)

Within professional and business services, employment in professional and 
technical services increased in June (+24,000). This industry has added 245,000 
jobs since a recent low in March 2010. Employment in temporary help services 
changed little over the month and has shown little movement on net so far this 
year.

Health care employment continued to trend up in June (+14,000), with the largest 
gain in ambulatory health care services. Over the prior 12 months, health care had 
added an average of 24,000 jobs per month.

In June, employment in mining rose by 8,000, with most of the gain occurring in 
support activities for mining. Employment in mining has increased by 128,000 since 
a recent low in October 2009.

Employment in leisure and hospitality edged up (+34,000) in June and has grown by 
279,000 since a recent low in January 2010.

Employment in government continued to trend down over the month (-39,000). Federal 
employment declined by 14,000 in June. Employment in both state government and local 
government continued to trend down over the month and has been falling since the 
second half of 2008.

Manufacturing employment changed little in June. Following gains totaling 164,000 
between November 2010 and April 2011, employment in this industry has been flat for 
the past 2 months. In June, job gains in fabricated metal products (+8,000) were 
partially offset by a loss in wood products (-5,000).

Construction employment was essentially unchanged in June. After having fallen 
sharply during the 2007-09 period, employment in construction has shown little 
movement on net since early 2010.

The average workweek for all employees on private nonfarm payrolls decreased by 0.1 
hour to 34.3 hours in June. The manufacturing workweek for all employees decreased 
by 0.3 hour to 40.3 hours over the month; factory overtime edged down by 0.1 hour 
to 3.1 hours. The average workweek for production and nonsupervisory employees on
private nonfarm payrolls remained at 33.6 hours in June. (See tables B-2 and B-7.)

In June, average hourly earnings for all employees on private nonfarm payrolls 
decreased by 1 cent to $22.99. Over the past 12 months, average hourly earnings 
have increased by 1.9 percent. In June, average hourly earnings of private-sector 
production and nonsupervisory employees declined by 1 cent to $19.41. (See tables 
B-3 and B-8.)

The change in total nonfarm payroll employment for April was revised from +232,000 
to +217,000, and the change for May was revised from +54,000 to +25,000.

Dollar Lifts As Fear Returns To Currency Markets

kum01049 — Wed, 23 Mar 2011 16:47:54 GMT

NEW YORK -- The dollar rose broadly in New York trade Wednesday as Middle East violence, Japan's nuclear crisis, and euro zone debt convulsions prompted a renewed interest in the greenback as an attractive safe-haven option.

Notably, the dollar traded up to session highs against the Swiss franc and reversed a trend of the bulk of safe-harbor flows pouring into the Swiss currency. The dollar had recently plumbed several record lows against the Swiss franc. In part, the Federal Reserve policy of persevering with ultra-loose monetary policy--along with still-soaring oil prices that threaten to stoke inflation--had conspired to limit the appeal of the greenback.

Last week's intervention by the Group of Seven had stabilized markets to a great degree. But there were signs that that tranquility was fading quickly, said analysts.

"The euphoria is wearing off after G-7 intervention," and edginess has returned to foreign-exchange markets, said Andrew Wilkinson, senior market analyst at Interactive Brokers in Greenwich, Conn.

Most reports that crossed traders' screens Wednesday had an unnerving effect and caused inflows into the greenback.

Five-year credit default swap protection on Israel's sovereign debt widened to 157 basis points, up from 149 basis points earlier, after reports of explosions near the entrance to Jerusalem. Police put the number of injured at 35 injured when a bomb exploded at a bus stop near that city's central bus station, officials said. The dollar strengthened after news of these explosions.

The euro-zone debt crisis reared its ugly head again with peripheral bond markets under pressure and the currency showing strain as a torrent of risks including a key Portuguese austerity vote raised nerves in the region once again.

Portugal will go ahead with a key parliamentary vote Wednesday on fresh austerity measures proposed by Prime Minister Jose Socrates. Confusion over the status of this vote caused overall choppy conditions in the euro-dollar pair in New York.

An erroneous report of a vote postponement caused fleeting flows into the euro as a delay was perceived by some traders to be better than speculated rejection of Portugal austerity measures, said Aroop Chatterjee, chief foreign exchange quantitative strategist at Barclays Capital in New York.

Contributing to negative euro sentiment, negotiations on boosting the euro-zone's provisional bailout fund and cutting the borrowing costs on Ireland's emergency loans have stalled, an EU diplomat said Wednesday, ahead of a key summit in Brussels this week.

The euro has enjoyed a strong start to the year, supported by expectations the European Central Bank will raise its key interest rate. But the resurfacing of debt concerns in the region threaten to melt some of the euro's recent rise to near four-month highs, said analysts.

The euro recently traded down to session lows of $1.4099 from $1.4195 late Tuesday, according to EBS via CQG.

The dollar also moved to a high of CHF0.9088 from CHF0.9036.

There were no signs that there was further intervention to stem the yen's strength in the midst of an unresolved nuclear crisis, and many analysts predicted that the Bank of Japan would have to go it alone on further endeavors into markets.

The dollar was recently at Y80.92 from Y80.95 late Tuesday, according to EBS via CQG.

Crude Ticks Higher As Gasoline Inventories Fall

kum01049 — Wed, 23 Mar 2011 16:33:23 GMT

NEW YORK -- Oil futures rose Wednesday as fighting continued in Libya and the U.S. government said U.S. gasoline supplies fell sharply last week.

Light, sweet crude for May delivery rose 77 cents, or 0.7%, to $105.74 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange was down 9 cents at $115.61 a barrel. The front-month Nymex contract got a roughly $1 boost with the expiration of the April contract on Tuesday, which settled at $104 a barrel.

The U.S. and its allies continued to pound forces loyal to Col. Moammar Gadhafi in Libya, where 1.3 million barrels a day of oil exports have been sealed off by the fighting and Western sanctions. The U.S. said Tuesday the pace of attacks should slow in the coming days, though market participants have been gripped by uncertainty over how long the fighting will last.

"Continued insufficient coordination and a vague definition of the coalition's objectives...do not help to ease concerns about oil supply security," analysts from Vienna-based JBC Energy said in a report.

Crude prices have risen sharply in recent sessions as the Western intervention in Libya and fears of broader supply disruptions overshadow the disaster in Japan. Crude prices have returned to highs reached before the March 11 earthquake devastated northeastern Japan, sparked a nuclear crisis and sent investors fleeing risky assets like commodities. Nymex crude is up more than 8% over the last week.

Crude prices extended their gains after the Department of Energy reported a larger-than-expected decline in U.S. gasoline inventories last week. The DOE's Energy Information Administration said gasoline stocks fell 5.3 million barrels during the week ended Friday. Analysts surveyed by Dow Jones Newswires expected a 2-million-barrel decline.

Crude inventories rose 2.1 million barrels, stocks of distillates, including heating oil and diesel, stocks were flat, the EIA said. Refinery runs rose 0.7 percentage point to 84.1% of capacity. Analysts expected crude stocks to rise 1.7 million barrels, while distillate stocks were seen falling 1.4 million barrels and refinery runs were seen as flat at 83.4%.

Despite the draw in gasoline, the rise in crude stocks illustrates that the U.S. remains well supplied with oil in spite of the recent turmoil in the Middle East, said Carl Larry, head of Oil Outlooks and Opinions LLC in Houston.

"There's nothing here in these stats to say we're undersupplied," he said.

Front-month April reformulated gasoline blendstock, or RBOB, recently rose 1.3 cents, or 0.4%, to $3.0168. April heating oil fell 0.75 cent, or 0.2%, to $3.0687 a gallon.

US Feb New Home Sales Fall 16.9% To Record Low

kum01049 — Wed, 23 Mar 2011 16:28:18 GMT

US Feb New Home Sales Fall 16.9% To Record Low
By ALAN ZIBEL AND JEFF BATER
Of DOW JONES NEWSWIRES

WASHINGTON -- Sales of new homes plunged last month to a new record low and prices fell to the lowest in more than seven years as the U.S. housing market sputters even as other parts of the economy turn around.

Sales sank 16.9% from a month earlier to a seasonally adjusted annual rate of 250,000 in February, the Commerce Department said Wednesday. The previous record low of 274,000 was set last August.
New Home Sales Feb Jan Overall Sales:    250K    301Kr
Percentage Change:    -16.9%    -9.6%r
Months' Supply:    8.9    7.4r
Consensus: 290K
Actual: 250K

The results were far worse than forecast. Economists surveyed by Dow Jones Newswires had predicted the sales rate would rise 2.1% to an annual rate of 290,000. Sales were down 28.0% from February 2010.

While sales in January were revised higher, Ian Shepherdson, of High Frequency Economics, said Wednesday's report "is still horrible." Coming off the worst year for new home sales on record in 2010, the housing market continues to struggle to recover from a painful bust.

With demand weak, prices have been falling. The median sales price for a new home sold last month was $202,100, down 13.9% from $234,800 a month earlier. It was the sharpest monthly price decline on record and the lowest median price since December 2003.

Rising consumer spending made the economy speed up at the end of 2010. Manufacturing in the U.S. is growing and even the jobs market has showed improvement. Still, unemployment remains high. That and a steady supply of foreclosures are expected to keep sales and prices low, especially in the market for newly built homes, which sell for more than previously occupied ones.

"Buyers in most cases will find more selection and better pricing in the existing home market," Daiwa Securities analyst Michael Moran said.

With demand weak, builders have kept construction low. Home construction in the U.S. took the steepest monthly plunge in nearly 27 years in February and new building permits set a record low, the Commerce Department said last week.

There is no incentive for builders to build more homes," Capital Economics economist Paul Ashworth said. "If anything, it looks like residential construction will continue to be a drag on economic growth this year."

Evidence of a double dip in U.S. home prices, meanwhile, has been mounting. U.S. home prices fell for a third straight month in January, a government agency said Tuesday. Home prices fell 0.3% on a seasonally adjusted basis in January compared with December, according to the Federal Housing Finance Agency's monthly home-price index released Tuesday. It was the third straight month of declines.

Earlier in the week, the National Association of Realtors reported that sales of existing homes in February dropped 9.6% from a month earlier, and the median sales price of $156,100 was the lowest since February 2002. Prices are falling because of the large amount of foreclosures and other distressed properties hitting the market.

While lower prices mean homes are becoming more affordable, an extended decline can fuel the market's woes as consumers hold off for a better deal.

A survey of 111 economists and other housing analysts released this week by MacroMarkets LLC found that analysts expect U.S. home prices won't hit bottom until next year. The analysts, on average, expect home prices as measured by the Standard & Poor's/Case-Shiller national index to fall 1.4% in 2011.

The survey was conducted during the first two weeks of March. Last June, economists polled in the same survey expected prices would rise by 1.3% this year.

Already, a large supply of unlisted bank-owned homes and potential foreclosures sit on the horizon, a "shadow inventory" that could push down prices even more. Those discounted homes make it difficult for builders to compete.

The number of new homes for sale at the end of February was unchanged at 186,000, a supply that would take 8.9 months to deplete at the current sales rate. A six-month supply of new homes is considered healthy. The supply in January was 7.4 months.

The Commerce report said new-home sales last month fell in all four regions, including a 57.1% drop in the Northeast and a 27.5% decline in the Midwest. Sales also fell 14.7% in the West and 6.3% in the South.

"We continue to expect the recovery in housing to be disappointingly and frustratingly slow," RBS economists said in a note to clients. "Progress in the sector continues to be characterized as "one step forward, one step back.'"

Gold and Silver Fed View.

kum01049 — Wed, 23 Mar 2011 16:17:24 GMT

With gold and silver still consolidating, today King World News interviewed Bill Fleckenstein, President of Fleckenstein Capital. When asked about Fed Chairman Bernanke Fleckenstein stated, "He has been pursuing similar policies to Greenspan and their answer to everything is money printing. They are oblivious to the fact that the excess stimulus they create helps precipitate the bubbles, which leads to disasters, which leads them to more money printing. It’s really sort of shocking to think that these are all theoretically well educated men.”

March 22, 2011

When asked what to look for going forward for gold and silver Fleckenstein remarked, "I think it’s more of the same, more inflation, more watering down of paper money and a continuation of the trends that we have seen. All of those things are going to be supportive of the price of precious metals. I don’t see the central banks doing anything to retard that process. I mean they are all terrified still of the phantom of deflation.”

When asked if he was surprised by the move in silver Fleckenstein replied, "I find it surprising in that why didn’t it go higher sooner? So then it goes higher all at once, it’s kind of the nature of markets. I have a hard time getting used to silver at $36, but gold at $1,400 is a price we haven’t seen a lot of either. The policies that have been at work which helped to precipitate those price moves are still at work. So who’s to say where these markets go?”

It will be interesting to see how the metals trade the rest of this week as gold and silver are both near recent highs.

Eric King

Gold, Silver, PGMs Down On Flight To Cash

kum01049 — Tue, 15 Mar 2011 12:35:05 GMT

Gold, Silver, PGMs Down On Flight To Cash

By James Campbell
Of DOW JONES NEWSWIRES

SINGAPORE -- Gold, silver and platinum group metals were all lower in Asia Tuesday, after the escalating Japan nuclear crisis precipitated steep losses in Japanese equities, pushing Asian investors to move into cash.

It was shades of 2008 for the gold market, with the U.S. dollar, the Japanese yen and the Swiss franc appreciating as investors sought liquidity.

News of a fire at Tokyo Electric Power's No. 4 reactor at the Fukushima Daiichi plant in northeastern Japan was the main driver of the selling amid reports of radiation leakage.

This sent the Nikkei-225 equity index down 14.4% at one point before recovering some ground to close down 11% at 8,605.15, while regional equity markets were also mostly lower.

"It was the Nikkei dive pushing the dollar up and gold just got caught," said a Sydney-based trader.

Crude oil was not helping gold either, falling as demand destruction and shuttered refining capacity due to the Japan earthquake outweighed any concerns over the still-tense political situation in the Middle East.

At 0550 GMT Nymex April crude was at $99.50 a barrel, down $1.66.

Spot gold was at $1,414.80/oz, down $14 since the New York close. On Tocom February 2012 gold was at Y3,719 a gram, down Y52.

Apart from Japan and the Middle East, the gold market will be watching the result of a one-day U.S. Federal Reserve meeting due at 1815 GMT.

Should the Fed take a more optimistic tone on the U.S. economy, it could be negative for gold, although the recent strength in oil and the Japan situation may keep its statement cautious.

Spot silver was at $35.18/oz, down 76 cents, while platinum and palladium were again suffering liquidation due to the Japan situation.

Spot platinum was at $1728/oz, down $27, and spot palladium was at $728/oz, down $16, also hurt by indications China might tighten monetary policy further after its central bank raised the yield on one-year bills by 20 bps after keeping it flat over the past four weeks.

Harmonic

kum01049 — Tue, 08 Mar 2011 05:57:26 GMT

Zinc Long Term Target

kum01049 — Mon, 28 Feb 2011 05:00:26 GMT

Due to global demand and short fall in production of commodities, Base metal continue to increase in price.As such , Zinc is going to be the Leading bull in the base metals .Hence then keep the long term target of 180 in 2 years time frame.

Consumer Prices in U.S. Climb More Than Forecast

kum01049 — Thu, 17 Feb 2011 16:47:17 GMT

The cost of living in the U.S. climbed more than forecast in January, led by higher prices for food and fuel that may be starting to filter through to other goods and services.

The consumer-price index increased 0.4 percent for a second month, exceeding the 0.3 percent median estimate of economists surveyed by Bloomberg News, figures from the Labor Department showed today in Washington. The so-called core rate, which excludes volatile food and fuel costs, rose 0.2 percent, the biggest gain since October 2009.

Growing economies in Asia and Latin America are boosting global demand for oil and other commodities, raising costs for American factories. Accelerating growth is prompting some companies to carry out beginning-of-year price increases even as consumers remain constrained by unemployment at 9 percent.

"You’re going to see more companies that attempt to pass through” higher costs, said Tom Porcelli, chief U.S. economist at RBC Capital Markets Corp. in New York, who correctly forecast the gain in core prices. "How successful they are depends on the economic backdrop. We’re looking at a slightly firmer inflation backdrop.”

The projected gain in consumer prices was based on the median of 79 economists in a Bloomberg survey. Estimates ranged from increases of 0.2 percent to 0.5 percent.
More Claims

Another Labor Department report showed more Americans than projected filed first-time claims for unemployment insurance last week, a sign the improvement in the labor market will take time to develop.

Applications for jobless benefits increased by 25,000 to 410,000 in the week ended Feb. 12, exceeding the 400,000 median forecast of economists surveyed by Bloomberg. The total number of people receiving unemployment insurance was little changed, while those collecting extended payments decreased.

Stock-index futures dropped after the reports. The contract on the Standard & Poor’s 500 Index maturing in March fell 0.2 percent to 1,330.2 at 8:48 a.m. in New York. Treasury securities rose, sending the yield on the benchmark 10-year note down to 3.57 percent from 3.62 percent late yesterday.

Federal Reserve policy makers took a more optimistic view of the U.S. economy last month while maintaining their dissatisfaction with job growth as they pressed forward with an expansion of record monetary stimulus, minutes of last month’s policy meeting released yesterday showed.
Fed View

Even with soaring commodity costs, the Fed remains concerned that consumer inflation is below its long-range annual target of 1.6 percent to 2 percent.

"Despite further increases in commodity prices, measures of underlying inflation remained subdued and longer-run inflation expectations were stable,” the minutes said.

Energy costs increased 2.1 percent in January from a month earlier, and rose 7.3 percent for the prior 12 months, today’s report showed. Food prices rose 0.5 percent last month, the biggest gain since September 2008, and were up 1.8 percent for the 12-month period.

Core inflation was boosted by a 1 percent increase in the cost of clothing, the most since February 2009, and a 2.2 percent rise in airline fares.
Rents Climb

The report showed rents, which make up almost 40 percent of the core rate climbed at the same pace as in prior months. Owners-equivalent rent, one of the categories designed to track rental prices, increased 0.1 percent in January. Mounting foreclosures are reducing homeownership, may drive up demand for rental housing.

The cost of medical care increased 0.1 percent, restrained by a 0.1 percent drop in medical services that was the biggest since November 1975.

An unemployment rate that’s held at or above 9 percent since May 2009 is also restraining labor costs. The threat of deflation, or a prolonged decline in prices that’s harmful to the economy, prompted Fed policy makers November 3 to announce the central bank’s purchase of $600 billion in additional Treasury securities by the end of June.

Illinois Tool Works Inc., a Glenview, Illinois-based diversified manufacturer of engineered products and specialty systems, is one company that has been able to pass on higher costs to customers.

"Costs have continued to rise, even in the first quarter, for things like steel,” Ronald D. Kropp, chief financial officer, said in a conference call on Jan. 31. "We have put price increases in place. Our goal is to recover not just the cost, but also the margin.”
No Pass-Through

Chipotle Mexican Grill Inc., which owns and operates quick- serve Mexican restaurants across the U.S., is seeing its costs for beef, cheese, tomatoes and green peppers rise. Still, the company has been reluctant to raise prices.

"Commodity inflation has continued to push our food costs higher in 2011 already, and we expect continued inflationary pressure on many of our ingredients,” said John R. Hartung, chief financial officer at Denver-based Chipotle in a Feb. 10 earnings teleconference. "We plan to hold off on any menu- pricing decisions until later in the year, which will allow us to see how inflation plays out on a sustained basis.”

The CPI is the broadest of three monthly price gauges from the Labor Department, because it includes goods and services. Almost 60 percent of the CPI covers prices consumers pay for services ranging from medical visits to airline fares and movie tickets.