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Economy in Brief

U.S. Import Prices Down Sharply
by Tom Moeller December 11, 2008

Total U.S. import prices declined another 6.7% last month after the revised 5.4% drop during October. Consensus expectations had been for a 4.8% November decline.

Petroleum prices were off sharply again by 25.8% and this month imported crude petroleum prices are down another 20% m/m.

November import prices less petroleum doubled their decline of October and fell 1.8%. During the last three months prices fell at a 13.2% 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 an 83% (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.

Capital goods import prices fell 0.4%. On a three-month basis prices fell at a 2.5% annual rate after a 5%-to-6% rate of increase earlier this year. Less the lower prices of computers, capital goods prices also fell 0.4% and the three-month growth went to a negative 1.4% after 9.0% growth earlier this year. Prices of computers, peripherals & accessories were down at a 6.8% rate during the last three months.

Prices for nonauto consumer goods fell 0.3%. The rate of increase during the last three months went to a negative 1.1% versus the 5.9% peak earlier this year. Durable goods prices overall rose were unchanged during the last three months versus a 6.2% rate of increase earlier this year.

Total export prices fell 3.2% due to a 7.0% (-2.8% y/y) decline in agricultural prices. Nonagricultural export prices also fell by 2.9% and they were unchanged y/y. It was the fourth consecutive monthly decline.

Import/Export Prices (NSA, %) November October Y/Y 2007 2006 2005
Import - All Commodities -6.7 -5.4 -4.4 4.2 4.9 7.5
  Petroleum -25.8 -19.8 -29.0 11.6 20.6 37.6
  Non-petroleum -1.8 -0.9 2.4 2.7 1.7 2.7
Export- All Commodities -3.2 -2.0 -0.2 4.9 3.6 3.2
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