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Economy in Brief

Import Prices Jumped; Excl. Oil Strength in Industrial Materials
by Tom Moeller June 9, 2006

Total import prices advanced another 1.6% last month after a 2.1% jump during April. Again, the rise easily surpassed Consensus expectations which had been for a 0.7% increase.

Import prices less petroleum jumped 0.6%, the strongest monthly gain since October. That strength was led by higher prices for nonoil industrial materials which surged 2.5% (9.0% y/y) reflecting firm prices for paper (5.9% y/y), nonferrous metals (49.7% y/y) and chemicals (5.5% y/y).

Capital goods prices were unchanged as they have been all year (-1.6% y/y) and excluding computers, capital goods prices rose just 0.1% (0.6% y/y). Prices for nonauto consumer goods rose 0.3% (-0.1% y/y) following two months of decline.

During the last ten years there has been a 66% (negative) correlation between the nominal trade-weighted exchange value of the US dollar vs. major currencies and the y/y change in non oil import prices. The correlation is a lower 47% against a broader basket of currencies and a lower 57% against the real value of the dollar.

Petroleum prices posted a 5.2% increase but recent declines in crude oil prices suggest moderation.

Export prices were firm again and rose 0.7%. Pricing strength has been broad based for industrial supplies (10.9% y/y) but foods & beverages are down 1.2% (y/y), capital goods prices are just 0.2% higher y/y while nonauto consumer goods exports prices are up 1.0% y/y.

Import/Export Prices (NSA) May April Y/Y 2005 2004 2003
Import - All Commodities 1.6% 2.1% 8.3% 7.5% 5.6% 2.9%
  Petroleum 5.2% 11.5% 45.7% 37.6% 30.5% 21.0%
  Non-petroleum 0.6% 0.1% 1.5% 2.7% 2.6% 1.1%
Export - All Commodities 0.7% 0.6% 3.4% 3.2% 3.9% 1.6%
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