Wholesale Apparel Prices Reverse Field.

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Author: Ellis, Kristi

Dateline: WASHINGTON

Wholesale prices for domestically produced women's and girls' apparel rose 0.1 percent in May from their April levels, reflecting some stability in pricing power after years of deflation, the Labor Department's Producer Price Index revealed Thursday.

Prices for U.S.-made apparel and textiles have been falling for years, largely as a result of increased competition with foreign manufacturers. But recent data show that trend may be changing. The slight May increase in the women's and girls' apparel PPI followed a 0.3 percent monthly rise in April and a 0.1 percent decline in March. Earlier this week, the government reported that retail prices of women's clothing were up for the third consecutive month in May.

Producer prices for all apparel rose a healthy 0.7 percent in May, which left them 0.1 percent higher than their level in May 2003.

One economist warned external factors, rather than rising demand for costlier apparel, may be driving the price increases.

"I think this increase is mostly a reflection of the rising cost of inputs, particularly energy costs, and that forces textile and apparel producers to increase their prices," said Charles McMillion, president and chief economist at MBG Information Services.

He acknowledged the recent upswing in wholesale prices is a big improvement over the past eight years, during which prices have spiraled downward. "Energy prices rose in May and April along with cotton prices, and producers are caught between the lack of pricing power in their sales and the rising costs for inputs," said McMillion. "They are doing the best they can."

For all finished goods, producer prices rose 0.8 percent last month, following a 0.7 percent increase in April and reflecting continued inflation in wholesale prices. The "core rate" for all finished goods, which factors out volatile energy and food costs, was up 0.3 percent in May.

By category, prices for women's knit and woven shirts and blouses, skirts, tailored jackets and vests, jeans and slacks, as well as sweaters and bras, remained flat in May. Wholesale prices for dresses fell 0.3 percent, while prices for underwear rose 0.2 percent and prices for nightwear rose 0.1 percent.

Wholesale prices for apparel made in knitting mills fell 0.7 percent last month. Within that sector, prices for sweaters, knit underwear and nightwear, and pantyhose and tights remained unchanged, while prices for knit shirts fell 2.7 percent

The DOL this year overhauled the way it calculates the PPI and as a result doesn't offer year-to-year comparisons for every component index.

Among categories in which the Labor Department's new index does provide year-over-year comparisons, wholesale prices for unfinished gray fabrics rose 0.8 percent in May and increased 0.4 percent against a year ago. Finished fabric prices edged up slightly by 0.1 percent last month and rose 0.2 percent year-over-year, while prices for yarns rose 0.2 percent in May and surged 4.2 percent against May 2003.

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By Kristi Ellis