AUGUST WHOLESALE PRICES FALL FOR 4TH MONTH IN A ROW

Byline: Alison Maxwell

WASHINGTON — Prices continue to erode.
Wholesale prices for U.S.-made women’s apparel declined for the fourth consecutive month in August, a sign that import and retailer competition could be increasing, analysts said.
The Labor Department reported Friday that wholesale prices for U.S.-made women’s apparel dropped 0.8 percent in August, the largest decrease since April 1996, when prices fell by the same amount. Prices fell by 0.2 percent in July, 0.6 percent in June and 0.5 percent in May.
“This is an unprecedented drop,” said Carl Priestland, an apparel industry consultant. “It’s an indication that things are getting pushed to the wall, but right now it’s a flag. It needs to be watched carefully, because prices shouldn’t be going down in a reasonable market.
“Many establishments recently have been feeling the strain of foreign competition and this has caused many to lower their prices in an effort to remain competitive,” an economist with the Bureau of Labor Statistics said. “In addition, some companies have been contracting out the manufacturing of their products to foreign markets with a cheaper work force.”
Against a year ago, wholesale women’s apparel prices were down 0.2 percent, as measured by the Producer Price Index. The index for all U.S.-made apparel dropped 0.4 percent in August, the largest decrease since November of 1995, when prices dropped 0.6 percent.
“The pressure to keep prices down in a globally competitive arena is very important and evident,” said Larry Horowitz, a senior economist with Primark Decision Economics. “Textile prices have been dropping also, and then there is the question of whether stores are working to unload more-formal women’s wear.”
On a seasonally adjusted basis, wholesale prices for all finished goods rose 0.5 percent for the month, after a 0.2-percent advance in July and a 0.1 percent dip in June. Excluding volatile food and energy prices, the index fell 0.1 percent, after showing no change in July. Against year-ago levels, the finished goods index increased a not seasonally adjusted 2.3 percent.
Horowitz said the Friday report could stave off another interest rate hike. “The general news was that prices were very calm,” he said, noting the only evidence of price pressure was in intermediate goods, where prices for some commodities continue to show increases. “But when you get right down to the goods side of the equation, everything is fairly good outside of energy,” he added.
Breaking down women’s apparel into categories, the PPI showed notable wholesale price decreases in knits, off 5.1 percent for the month and 4.5 percent for the year. Prices of blouses were down 2.2 percent in August, but up 2.7 percent for the year. Prices of dresses increased 0.1 percent for the month, but continued the long- term price decrease, dropping 4.2 percent for the year.
Meanwhile, prices for U.S.-produced textiles showed continued weakness, dropping 0.2 percent for the month and falling 2.1 percent over the year.