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Economy in Brief

U.S. Import Prices Fell Again; Oil & Nonoil Prices Lower
by Tom Moeller November 14, 2008

Total U.S. import prices fell another 4.7% last month following the little-revised 3.3% September drop. Consensus expectations had been for a 4.4% drop during October.

Petroleum prices cratered another 16.7% and this month imported crude petroleum prices are down another 19% m/m.

During October import prices less petroleum fell 0.9%, the same as during September. During the last three months prices fell at an 8.4% annual rate versus the 12 to 13% rates of positive growth this past spring.

Growth in import prices will slow further given the recent rise in the foreign exchange value of the dollar. 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.

Capital goods import prices fell 0.2% after two months of no change. On a three-month basis prices fell at a 0.9% annual rate after a 5% to 6% rate of increase earlier this year. Less the lower prices of computers, capital goods prices ticked 0.1% lower but three month growth was just 1.1% after 9% growth earlier this year. Prices of computers, peripherals & accessories were down at a 6.8% rate during the last three months.

Finally, prices for nonauto consumer goods ticked up 0.1% and the 0.4% rate of increase during the last three months is down from the 5.9% peak earlier this year. Durable goods prices overall rose at a 1.2% rate during the last three months versus a 6.2% rate of increase earlier this year.

Total export prices fell another 1.9% due to an 8.7% (+5.7% y/y) decline in agricultural prices which followed a 0.1% September uptick. Nonagricultural export prices slumped another 1.2% (+4.0% y/y), the third consecutive monthly decline.

Import/Export Prices (NSA, %) October September Y/Y 2007 2006 2005
Import - All Commodities -4.7 -3.3 6.7 4.2 4.9 7.5
  Petroleum -16.7 -10.2 13.1 11.6 20.6 37.6
  Non-petroleum -0.9 -0.9 5.0 2.7 1.7 2.7
Export- All Commodities -1.9 -0.8 4.2 4.9 3.6 3.2
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