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Producer Prices Fall 1.5 % in November

WASHINGTON — Wholesale prices for domestically produced women’s apparel fell sharply in November with a 1.5 percent decrease, which reversed a slight uptick in October, the Labor Department reported Friday in its Producer Price...

WASHINGTON — Wholesale prices for domestically produced women’s apparel fell sharply in November with a 1.5 percent decrease, which reversed a slight uptick in October, the Labor Department reported Friday in its Producer Price Index.

This story first appeared in the December 16, 2002 issue of WWD.  Subscribe Today.

Compared with November 2001, women’s apparel prices at the producer level were flat.

Wholesale prices for all U.S.-produced apparel fell 0.9 percent in November against October and fell 0.1 percent against the year-ago month. Prices for girls’, children’s and infants’ apparel showed the only sign of strength, with a 2.7 percent increase last month against October, but remained unchanged against November 2001.

“Producer prices have been under pressure for some time and that won’t change for some months yet,” said John Mothersole, senior economist at Global Insight. “We are looking at the second half next year before we begin to see a noticeable lift in markets that will institute price increases that actually stick.”

Charles McMillion, chief economist at MBG Information Services, attributed the continuing softness in prices to oversupply and deep discounting at retail.

“This softness in prices goes right to the bottom line of profits,” he said. “Companies are doing everything they can to eke out a profit.”

McMillion said he expects the overcapacity in production to start hurting businesses, which will be forced to shut down unused capacity and lay off more workers early next year.

“The problem is domestic producers are not competing with Canada, Europe or Japan,” McMillion said. “They are competing with China where differentials in prices are so great.”

The PPI for all U.S.-made goods fell 0.4 percent in November, marking the biggest decline in six months, due mainly to falling gas and auto prices.

Wholesale prices for domestically produced women’s sweaters, jackets and jerseys plunged 13.3 percent in November but gained 5 percent against November 2001, while prices for knit outerwear, sportshirts and sweatshirts fell 5.2 percent last month against October, but rose 0.2 percent year-over-year.

Domestically produced prices for dresses fell 2.7 percent in November and remained flat against November 2001, while prices for slacks, jeans and dungarees fell 2.2 percent last month and remained flat against a year ago.