Producer prices declined last month. The Department of Labor reported that the Producer Price Index for Finished Goods (PPI) declined 0.9 percent on a seasonally-adjusted basis in August, following an increase of 1.2 percent in July and 1.8 percent in June. Food and especially energy continue to dominate the index. While food prices rose 0.3 percent last month, energy prices fell 4.6 percent, which contributed to the index’s decline. (See Chart) Excluding food and energy, the producer price index rose 0.2 percent in August, following a 0.7 percent jump in July.

Retail sales are weaker than expected. The Census Bureau reported that advance estimates of total retail and food services sales fell 0.3 percent in August 2008. This current decline follows a 0.5 percent decline in July. Excluding auto sales, retail sales were down 0.7 percent. Changes in retail sales are an indicator of broad consumer spending patterns. Consumers may be cutting back spending because of mounting job losses, and because house price declines have reduced household wealth and access to credit.

Pending home sales decline. The National Association of Realtors reported that pending home sales declined 3.2 percent in July after a revised 5.8 percent gain in June. Pending home sales are a leading indicator of the housing market as they are a sign that an actual purchase contract has been signed. Slowing levels of pending sales can be attributed to tighter credit conditions, which continue to prevent buyers from taking advantage of lower prices and falling interest rates.

Claims for unemployment insurance fell last week, but remain high.   The Department of Labor reported that advance numbers for seasonally-adjusted initial claims for unemployment insurance were 445,000, which is a decrease from the previous week’s figure of 451,000. However, the 4-week moving average, which provides a better sense of an underlying trend in labor-market weakness, was at 440,000, an increase from the previous week.