July export prices rose 0.4% vs a 0.1% rise in import prices. The rise in import prices was in-line with the Econoday consensus estimate.
The Econoday Keynesian parrot was not happy. The parrot always wants your dollar to buy less and thus roots for higher import prices.
A boost in petroleum gave a lift to import prices while a boost from agricultural gave a boost to export prices. Import prices in July posted an as-expected 0.1 percent increase as petroleum was up 0.7 percent in the month. Outside of petroleum, however, July import prices limped in at no change. Prices of finished exports remain dead flat, at or near zero whether month-on-month or year-on-year. The yearly rate for overall imports is steady at a modest 1.5 percent.
Export prices rose a stronger-than-expected 0.4 percent with agricultural products up 2.1 percent to more than shave in half sharp declines in the two prior months. Prices for finished exports, like finished imports, are flat with consumer goods, at minus 1.7 percent year-on-year, especially weak. Total export prices are up only 0.8 percent year-on-year which is not good news for the nation’s exporters.
But what is good news for exporters is the tangible decline underway in the dollar. This points to increasing pressure for import prices which, though making them less affordable to U.S. buyers, will help the Federal Reserve in its efforts to stimulate inflation.
This report may give a tiny boost to third quarter GDP estimates. It takes a substantial move in import or export prices to move GDP more than a tick or two.
Mike “Mish” Shedlock