Econoday Report: Import and Export Prices 11, 2008

2008 U.S. Economic Events & Analysis

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Import and Export Prices

Definition
Indexes are compiled for the prices of goods that are bought in the United States but produced abroad and the prices of goods sold abroad but produced domestically. These prices indicate inflationary trends in internationally traded products. Why Investors Care

Released on 7/11/08 For Jun 2008

Import Prices - M/M change
Actual	2.6%
Consensus	1.8%
Consensus Range	1.0% to 2.8%
Previous	2.3 %

Export Prices - M/M change
Actual	1.0%
Consensus	N/A
Previous	0.3 %

Highlights
Readings across the import/export price report are near or at records, reflecting extremely elevated inflationary pressures rooted in oil prices that are testing the ability of businesses to absorb input costs. Import prices spiked 2.6 percent in June, this compares with +2.6 percent in May, +2.8 percent in April, and +3.1 percent in March. The year-on-year is +20.5 percent. Import prices for petroleum spiked 7.4 percent in June, just on the low end of similar gains in prior months with the year-on-year rate up 78.6 percent. Excluding petroleum, import prices spiked 0.9 percent in June vs. +0.7 percent in May and even higher readings in prior months with the year-on-year rate at +7.3 percent.

Moving to the export side, prices jumped 1.0 percent in June vs. 0.4 percent gains in the two prior months. The year-on-year rate is +8.6 percent. Here food prices, that is agricultural prices, are the culprit, up 2.2 percent in June alone for a year-on-year rate of +33.0 percent. Excluding agricultural goods, export prices jumped 0.9 percent for a year-on-year rate of +6.4 percent.

Econoday's reports should be more than just a list of percentage changes but in this case the increases are so elevated and so widely spread that a simple list serves the purpose of relaying the news: businesses are being hit by the greatest input cost pressure in memory. So far, businesses have been able to absorb these costs through productivity gains and by paring down their workforces. How long the consumer will remain insulated, that is not paying significantly higher prices for non-energy non-food goods, is arguably the greatest question facing the global economy and global economic policy makers. Financial markets showed no immediate reaction to the news which definitely sets up a sober prelude to next week's producer and consumer price reports. To underline the pressure, oil hit a new record near $147 moments after release of the report. There's more inflation news to follow later this morning with consumer inflation expectations in the Reuters/University of Michigan report.

Market Consensus Before Announcement
Import prices are experiencing extreme pressure from a surge in oil prices and other commodities. May's 2.3 percent spike in import prices put the year-on-year pace at a sharp 17.8 percent. Petroleum import prices jumped 7.8 percent in the month for a year-on-year rate of 68.8 percent - not a record but one of a handful of plus 50 percent readings. Prices of non-petroleum imports rose 0.5 percent in the month, elevating the year-ago pace to a record 6.6 percent.

Import prices Consensus Forecast for June 08: +1.8 percent
Range: +1.0 to +2.8 percent

Trends

Yearly changes in import and export prices reveal long term trends in inflation for tradable goods.

Data Source: Haver Analytics | Consensus Data Source: Market News International and Thomson Financial

2008 Release Schedule

Released On: 1/11 2/15 3/13 4/11 5/13 6/12 7/11 8/13 9/11 10/10 11/14 12/11

Released For: Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov