US: Import and Export Prices

Tue Oct 17 07:30:00 CDT 2017

Consensus Consensus Range Actual Previous Revised
Import Prices - M/M change 0.5% 0.2% to 0.8% 0.7% 0.6%
Export Prices - M/M change 0.4% -0.1% to 0.5% 0.8% 0.6% 0.7%
Import Prices - Y/Y change 2.7% 2.1%
Export Prices - Y/Y change 2.9% 2.3% 2.4%

Oil skewed cross-border prices sharply higher at the headline level in September, up 0.7 percent for imports, which is 2 tenths above Econoday's consensus, and up 0.8 percent for exports which is double the expected gain. Petroleum import prices jumped 4.5 percent in the month on top of August's 5.0 percent surge. Excluding petroleum, import prices rose 0.3 percent which is still tangible and a gain tied to a 1.8 percent jump for imported foods, feeds & beverages. Excluding both petroleum and foods, import prices managed only a modest 0.2 percent gain.

Pressure on the export side is centered in industrial supplies which rose 3.0 percent in September following August's 1.8 percent gain in a component where petroleum inputs play a significant part. This gain offset a sizable 0.7 percent decline in agricultural exports.

Headline pressures did not pass through to finished goods where, whether for imports or exports, monthly change is confined between 0.1 percent gains and 0.1 percent declines. Year-on-year prices for finished goods, which had been showing some life, are very subdued with a 1.2 percent gain for capital goods exports the highest reading and a 1.3 percent decline for consumer exports the lowest. Year-on-year prices for consumer imports, which is a critical category for the economy, are up 0.2 percent on the year.

Hurricane effects from Harvey and Irma had a small impact on data collection and their effects on oil prices had a strong impact at the headline levels. Yet the monthly effects are fading pointing to more subdued readings in the next report.

Market Consensus Before Announcement
September's import prices are not expected to cool much from August, the result of hurricane-inflated energy prices. Econoday's consensus is a 0.5 percent gain vs August's 0.6 percent surge while export prices, which also rose 0.6 percent in August on the back of petroleum-related price strength in industrial supplies, are expected to increase 0.4 percent. Outside of one-time factors, however, there were indications of fundamental price increases in August as finished goods posted rare and wide increases.

Import price indexes are compiled for the prices of goods that are bought in the United States but produced abroad and export price indexes are compiled for the prices of goods sold abroad but produced domestically. These prices indicate inflationary trends in internationally traded products.

Changes in import and export prices are a valuable gauge of inflation here and abroad. Furthermore, the data can directly impact the financial markets such as bonds and the dollar. The bond market is especially sensitive to the risk of importing inflation because it erodes the value of the principal (the original investment) which is paid back when the bond matures. It also decreases the value of the steady stream of interest rate payments on this type of security. Inflation leads to higher interest rates and that's bad news for stocks, as well. By monitoring inflation gauges such as import prices, investors can keep an eye on this menace to their portfolios.