US: Import and Export Prices

Thu Dec 14 07:30:00 CST 2017

Consensus Consensus Range Actual Previous Revised
Import Prices - M/M change 0.7% 0.3% to 1.0% 0.7% 0.2% 0.1%
Export Prices - M/M change 0.3% 0.2% to 1.0% 0.5% 0.0% 0.1%
Import Prices - Y/Y change 3.1% 2.5% 2.3%
Export Prices - Y/Y change 3.1% 2.7%

A monthly jump in energy prices drove import prices 0.7 percent higher in November which were otherwise unchanged when excluding imported fuel. Petroleum prices jumped 7.2 percent for the largest monthly rise since October last year. Natural gas prices also show pressure, up 26 percent for the biggest jump since July last year.

But the story of November import prices is no better than mixed as lower prices for foods, feeds, and beverages offset higher prices for nonfuel industrial supplies, consumer goods, and autos. Import prices for capital goods recorded no change in November.

Export prices rose 0.5 percent in November but the gain is narrow, led by industrial supplies that offset lower prices for capital goods and automotive vehicles. Export consumer goods prices recorded no change. And agricultural prices fell 0.6 percent on lower prices for vegetables and meats that more than offset higher prices for fruit.

Year-on-year, both import and exports are up 3.1 percent which are the most constructive showings since April. Yet, in a persistent negative, the nonfuel reading on the import side is up only 1.4 percent which unfortunately is right in line with other readings on core prices, all of them weak.

Market Consensus Before Announcement
Cross border prices, like other inflation readings, have been flat, up only 0.2 percent for October imports and unchanged for October exports. Prices for petroleum and for agricultural products both rose sharply in October but couldn't help the month's overall totals which were once again held back by weakness in finished prices. But Econoday's consensus for November does call for an oil effect on import prices, where the consensus is calling for a 0.7 percent gain, with export prices at a moderate 0.3 percent.

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.