US: Import and Export Prices

Thu Jun 14 07:30:00 CDT 2018

Consensus Consensus Range Actual Previous Revised
Import Prices - M/M change 0.5% 0.4% to 0.9% 0.6% 0.3% 0.6%
Export Prices - M/M change 0.3% 0.2% to 0.6% 0.6% 0.6% 0.6%
Import Prices - Y/Y change 4.3% 3.3% 3.6%
Export Prices - Y/Y change 4.9% 3.8% 3.7%

Import and export prices are both beginning to move higher, up 0.6 percent for each in both May and April. Year-on-year rates are rising notably, suddenly above 4 percent at 4.3 percent for imports and 4.9 percent for exports. These are the hottest yearly readings since the easy comparisons early in the expansion, in 2011.

Oil is the major factor on the import side with crude up 6.7 percent in the month and helping to feed a 2.5 percent rise in industrial supplies. But durables are also higher, up 1.4 percent and getting a boost from imported iron and steel where tariffs are in effect and which rose 1.5 percent in May following 3.7 and 2.6 percent gains in April and March. Aluminum import prices, also the subject of tariffs, jumped 5.1 percent in May following mixed results in the prior two months.

On the export side agricultural prices are a big factor in May, up 1.6 percent in the month. Export prices for industrial supplies, again affected by oil, also rose 1.6 percent following April's 1.3 percent gain.

What's not showing any pressure, and what is a reminder of the soft results in Tuesday's consumer price report, are prices for finished goods, whether imports or exports. Monthly change across these readings shows either marginal gains or marginal declines with year-on-year gains averaging only 1.0 percent.

By country, import prices with Canada are going up the most, 1.9 percent higher in May for a year-on-year 8.1 percent. Import prices from Europe rose 0.4 percent in the month with this year-on-year gain at 4.3 percent. These are offset, however, by very weak prices from China, up 0.1 percent in the month for a yearly gain of only 0.3 percent, and Japan, also up only 0.1 percent with this yearly rate at 0.2 percent.

Today's report is a memorable one for this series. Price data below the consumer level are showing sudden acceleration in what underscores yesterday's FOMC rate hike and increased forecasts for rate hikes to come.

Market Consensus Before Announcement
Import price pressures are expected to warm up in May following what was a surprisingly contained showing in April. High oil prices along with metal tariffs are the risk for import prices which forecasters see rising 0.5 percent in May following April's 0.3 percent gain. Export prices for May are seen up 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.