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Economy in Brief

U.S. Import Prices Boosted in July By Oil
by Tom Moeller August 10, 2007

A jump in petroleum prices, last month by 7.0%, again was the strength behind a 1.5% surge in overall July import prices. The surge was the largest since March and was ahead of Consensus expectations for a 1.1% increase.

An 8.2% (4.2% y/y) rise in crude oil prices was behind the strength in petroleum prices, overall. Higher fuel oil prices also contributed with an 11.5% (9.3% y/y) spike. Early in August, a decline yesterday in the price of Brent crude oil to $69.97 from an average $76.97 during July promises a reversal of perhaps all the strength during that month.

Less petroleum, import prices rose a modest 0.2% after a 0.1% uptick during June which was lower than the initial report of a 0.2% gain.

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 reduced 47% against a broader basket of currencies. Why a Dollar Depreciation May Not Close the U.S. Trade Deficit from the Federal Reserve Bank of New York is available here

Prices for industrial supplies & materials excluding petroleum fell 0.1% (+8.3% y/y). Paper & paper base stock prices fell 0.3% (-1.3% y/y) and metal prices fell 0.3% (+16.4% y/y). Building material prices rose 2.7% (-0.6 y/y). These detailed import price series can be found in the Haver USINT database.

Capital goods prices rose 0.2% (0.1% y/y) for the second month, led down again by a 0.2% (-5.9% y/y) drop in computers, peripheral and semiconductors. Less the high tech sector, capital goods prices rose a strong 0.4% (2.6% y/y) for the second month.

Prices for imported non-manufactured consumer goods were firm with a 0.5% ( 3.2% y/y) rise. Prices for most other nonauto consumer goods were little changed, except apparel prices which rose 0.3% (1.2% y/y).

Overall export prices rose 0.2% and the 3.9% y/y gain was the weakest since November of last year. Agricultural prices rose 1.5% (17.8% y/y) but nonagricultural export prices were unchanged (+2.8% y/y).

Today's statement by the Federal Reserve on Providing Liquidity to Financial Markets can be found here.

Import/Export Prices (NSA) July June Y/Y 2006 2005 2004
Import - All Commodities 1.5% 0.9% 2.8% 4.8% 7.5% 5.6%
  Petroleum 7.0% 4.4% 4.1% 20.6% 37.6% 30.5%
  Non-petroleum 0.2% 0.1% 2.8% 1.7% 2.7% 2.6%
Export- All Commodities 0.2% 0.3% 3.9% 3.6% 3.2% 3.9%
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