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Economy in Brief
U.S. Housing Affordability Declines Further in June
The NAR Fixed Rate Mortgage Housing Affordability Index fell 3.6% in June...
EMU Output Makes Solid Gain in June
The European Monetary Union posted a 0.7% increase for industrial output in June...
U.S. Producer Prices Fall During July; Core Increase Weakens
The Producer Price Index for Final Demand fell 0.5% during July...
U.S. Unemployment Claims Continue on an Uptrend
Initial claims for unemployment insurance filed in the week ended August 6 rose 14,000 to 262,000...
RICS Survey Points to More U.K. Housing Sector Weakness
The survey of housing market conditions in the U.K. continues to show strength in prices versus weakness...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller November 9, 2007
U.S. import prices during October surged 1.8%, the largest one month gain since May of last year, as petroleum prices jumped. Consensus expectations had been for a 1.1% increase.
Prices of petroleum products rose jumped 6.9% as Brent crude oil prices rose 7.4% to an average $82.70 per barrel.
Less petroleum, the 0.5% gain in import prices was the largest one month gain since May and the y/y gain in prices of 3.2% was the fastest since the end of 2005.
The lower dollar is having its effect in raising import prices. 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.
So far, the dollar's effect has been moderate but it has led to a turnaround in pricing pressure. Capital goods prices less the high tech sector rose 0.2% in October (2.9% y/y) but that y/y gain is an acceleration from the 1.4% rise during all of 2006. Consumer goods prices rose 0.1% for the third straight month, but again, the y/y rise of 1.4% is up from the 0.4% 2006 increase. Imported motor vehicle & parts prices rose 0.4% producing a y/y gain of 1.2%, double last year's gain.
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 surged 1.5% after three months of decline, lifting the y/y change to 8.9% and continuing the strength of the last several years. The detailed import price series can be found in the Haver USINT database.
Overall export prices increased 0.9%. Prices for agricultural products jumped another 3.9% (26.8% y/y) and nonagricultural export prices rose 0.5% (3.9% y/y), roughly equal to the annual gains during the last three years.
A Falling Dollar: Good News or Bad News? from the Federal Reserve Bank of Atlanta can be found here.
Import/Export Prices (NSA) | October | September | Y/Y | 2006 | 2005 | 2004 |
---|---|---|---|---|---|---|
Import - All Commodities | 1.8% | 0.8% | 9.6% | 4.9% | 7.5% | 5.6% |
Petroleum | 6.9% | 4.6% | 41.4% | 20.6% | 37.6% | 30.5% |
Non-petroleum | 0.5% | -0.2% | 3.2% | 1.7% | 2.7% | 2.6% |
Export- All Commodities | 0.9% | 0.3% | 5.6% | 3.6% | 3.2% | 3.9% |