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pdfImport and Export Price Trends
Import and export
price trends in 2006
Import prices rose for the fifth consecutive year,
and export prices experienced their largest increase in 18 years;
the rise in corn and soybean prices led the increase
in export prices, while the continued rise in costs
for energy and metals influenced overall increases
in both the import and export price indexes
Carol Rowan
and
Sonya Wahi-Miller
Carol Rowan is a supervisory
economist and Sonya WahiMiller is an economist in the
Division of International
Prices, Bureau of Labor
Statistics.
E-mail: [email protected]
[email protected]
I
mport prices increased 2.5 percent
in 2006—the fifth consecutive annual increase for this index—following an increase of 8.0 percent in 2005.
Import prices excluding energy goods
increased 2.9 percent, compared with
a more modest 1.1-percent increase in
2005. Export prices were up 4.5 percent,
compared with a 2.8-percent increase
in 2005. The rise was the largest yearto-year increase since the index rose 5.5
percent in 1988. Excluding agricultural
products, export prices rose 3.7 percent,
following a 2.6-percent increase the year
before. (See table 1.)
As in 2005, the increase in energy
prices influenced the overall increase for
import prices in 2006. Geopolitical instability and supply concerns drove energy prices higher for the first 8 months
of 2006; however, due to price declines
that occurred later in the year, overall
price increases were much slower than in
2004 and 2005. Metals and energy prices
continued to increase in 2006, impacting overall increases for both import and
export prices. Prices for industrial metals, namely aluminum and copper, along
with prices for iron and steel remained
high in 2006 due to strong industrial
and international demand. The continued price increase for both metals and
energy prices put upward pressure on
finished goods prices, namely automotive vehicles and capital goods.
In contrast to 2005, the U.S. dollar weakened against the Euro, United
Kingdom (U.K.) pound, and Swiss franc
in 2006, impacting import prices for
capital goods, consumer goods, and, to a
lesser extent, automotive vehicles.
Other price measures
The Consumer Price Index for All Urban Consumers (CPI-U) increased at the
same rate as the Import Price Index in
2006. As was the case with the Import
Price Index, the CPI-U also experienced
smaller increases compared with the previous 2 years, with energy prices playing
a smaller role compared with 2004 and
2005. (See chart 1.)
Overall, the CPI-U increased 2.5 percent in 2006, slower than the 3.4-percent in 2005 and 3.3 percent in 2004.
The energy component of the CPI-U rose
2.9 percent in 2006, compared with 17.1
Monthly Labor Review • October 2007
Import and Export Price Trends
Table 1. U.S. import and export price indexes annual percent changes for selected categories of goods, 1997−2006
End
use
Description
Relative
importance,
November
20061
Percent change for 12 months ended in December—
1997 1998
1999
2000 2001
2002
2003 2004 2005
2006
Imports
All commodities...................................... 100.000 −5.2 −6.4
7.0 3.2 −9.1
4.2
2.4
All imports excluding
petroleum............................................. 82.778 –2.8 −3.3
.0
1.3 −4.5
.3
1.2
All imports excluding fuels..................... 80.324 —
— — —
—
.0
1.0
0 Foods, feeds, and beverages................ 4.488
1.3 −3.1
–.3 -4.0 –4.7
5.9
3.0
1 Industrial supplies and materials............ 35.271 –10.4 –17.1 33.7 13.8 –24.6 21.9
9.5
Excluding petroleum.......................... 18.050 –1.7 –6.7
5.1 11.2 –14.6
5.8
7.2
Excluding fuels.................................. 15.596
— —
—
—
—
3.6
6.3
10 Fuels and lubricants............................ 19.675 −23.8 –36.5 114.7 27.1 –41.9 53.7 13.2
100 Petroleum and petroleum products... 17.221 −25.5 –40.8 137.2 17.6 −39.5 56.9 12.8
2 Capital goods.........................................
Excluding computers, peripherals,
and Semiconductors........................
3 Automotive vehicles, parts
and engines.........................................
4 Consumer goods, excluding
automotives.........................................
8.0
2.5
3.7 2.4
3.0 1.1
1.9
2.9
8.0
5.4
4.3
22.0 25.5
16.4 11.3
13.4 4.4
5.0
4.6
11.1
31.5 43.5
.9
30.3 42.4 5.3
21.560
−7.4 −5.0
−3.3
−2.1
−2.7
15.091
−4.7
−1.8
−1.1
−1.0 −1.3 1.2 2.0
14.691 .5
−2.1
.0 .7 .7
23.989 −.9 −1.3
−.4
−1.2
−2.4
6.7
−1.1 −.8 −1.3 .5
−.2 .5 .9
1.8
−.8 −.7 .1
1.2
2.3
.4 .7
.9 .6
1.4
Exports
All commodities....................................... 100.000
Agricultural commodities......................... 8.115
Nonagricultural commodities.................. 91.885
0 Foods, feeds, and beverages............... 7.350
1 Industrial supplies and materials............ 30.132
Nonagricultural industrial supplies
and materials........................................ 28.638
−1.2 −3.4
.5 1.1 −2.5 1.0
−2.9 −9.3 −6.8
3.1 −1.8 8.0
−1.0 −2.7 1.2
.9 −2.5 .4
2.2 4.0
13.4 −5.9
1.3 5.0
2.8 4.5
4.9
13.5
2.6 3.7
−3.3 −8.3 −5.7 1.7
4.3 13.8
−1.4 −7.1 5.3
3.6
−1.3 −6.9 6.3 3.3
2 Capital goods........................................... 39.585 −1.6 −1.8 −1.1
Excluding computers, peripherals,
and semiconductors........................... 30.193 −.3 −.7 −.4
−.5
7.9
12.6 −4.5
−8.6
5.0
6.8 15.1
8.4
9.0
−8.4 4.8
6.3 16.6
8.5
9.2
−.6 .7 −.5
1.1
.3
−.8
−1.3
.8
.0
.5
.9
2.1 2.1
3.0
3 Automotive vehicles, parts
and engines........................................... 10.683
.8
..5
1.0
.5
.4
.8
.5
1.1
1.0
1.5
4 Consumer goods, excluding
automotives.......................................... 12.250
.8
–.8
.6
–.4
.2
–.6
.6
.1.3
.7
2.1
1
Relative importance figures are based on 2004 trade values. NOTE: Dash indicates data not available.
percent in 2005 and 16.6 percent in 2004. Overall energy
costs advanced at a 22.8-percent annual rate in the first
half of 2006, then declined at a 13.4-percent annual rate
in the second half of the year. Excluding food and energy,
the CPI-U increased 2.6 percent in 2006, compared with
2.2 percent in both 2005 and 2004. (See chart 2.)
The Producer Price Index (PPI) also increased in 2006,
in a fifth consecutive annual increase. Unlike the Export
Monthly Labor Review • October 2007
Price Index, lower energy prices led to a smaller increase
in the PPI in 2006 than in past years. Finished goods
prices increased 1.1 percent in 2006, much slower than the
5.4-percent increase in 2005. The slower rate of increase
can be attributed to the index for finished energy goods,
which fell 2.0 percent in 2006 after climbing 23.9 percent
in 2005. Finished goods excluding foods and energy rose
2.0 percent in 2006, compared with 1.4 percent in 2005.
Chart 1. Changes in the PPI, CPI, and import energy price indexes, 2002–06
12-month
percent change
100
12-month
percent change
100
PPI finished energy goods,
not seasonally adjusted
80
CPI energy, not seasonally
80
60
Import petroleum and
petroleum products
60
adjusted
40
40
20
20
0
0
–20
–20
–40
January
2002
July
2002
January
2003
July
2003
January
2004
July
2004
January
2005
July
2005
January
2006
July
2006
–40
Chart 2. Changes in the CPI, PPI, and import and export price indexes, 2002–06
12-month
percent change
6
12-month
percent change
6
4
4
2
2
0
0
CPI less food and energy
–2
PPI for finished products less
–2
food and energy
Imports excluding petroleum
–4
–6
Exports excluding agricultural
products
January
2002
July
2002
January
2003
July
2003
January
2004
July
2004
January
2005
July
2005
January
2006
July
2006
–4
–6
Monthly Labor Review • October 2007
Import and Export Price Trends
Import price trends
Energy. Import petroleum prices rose 5.3 percent in
2006, a significantly smaller increase than the 42.4-percent advance in 2005 and the 30.3-percent rise in 2004.
The index movement during the first 8 months of the year
mirrored the increases seen during the last 2 years, but a
steep drop in petroleum prices in the fall led to the smaller
increase for the year. (See chart 3.) Despite the smaller
increase in petroleum, prices for energy products still had
a significant impact on import prices in 2006.
During the first two-thirds of the year, petroleum prices
continued to climb steeply as they had in the previous 2
years. Several factors led to fears that supply would not
be sufficient to meet continued strong demand, including
geopolitical instability and a forecast for an active hurricane season. Limited spare capacity also led to concerns
that supply disruptions could unbalance the market and
push prices higher.1 In light of these uncertainties, oil
market participants, fearing they would be unable to get
needed supplies, began to store additional inventories as a
buffer against possible future supply problems.2
Supply concerns stemmed from instability in the Middle
East and Africa,3 as well as the shut down of the British Petroleum (BP) oil field in Prudhoe Bay.4 The dispute
between Iran and much of the world community over
Iran’s resumption of its nuclear program raised fears that
Iran would face punitive actions from the United Nations Security Council or would halt exports as a political
tactic.5 A supply disruption from Iran could have had a
significant impact on prices because global spare production capacity was less than the amount of oil Iran, the
world’s fourth largest oil exporter, was exporting per day.6
Political instability in Nigeria, the world’s eighth largest oil exporter, also led to higher prices, as attacks on
pipelines and kidnappings of foreign oil workers reduced
Nigerian exports by approximately 20 percent in February 2006.7 Nigerian oil production remained significantly
below normal levels throughout the spring and summer.8
The war between Israel and Hezbollah, while not directly
affecting oil supplies, added to market anxiety as market
participants feared the hostilities would spread, affecting
oil exports from the region.9 BP’s August 6th announcement that it would be shutting down its Prudhoe Bay oil
field due to pipe erosion and a small leak, contributed to
the rise in petroleum prices as well.
The forecast for an active hurricane season also contributed to concerns about future supply problems and
higher prices for the first two-thirds of 2006. The National Oceanic and Atmospheric Administration (NOAA)
Monthly Labor Review • October 2007
predicted that the 2006 hurricane season would be even
more active than in 2005, when hurricanes Katrina and
Rita significantly impacted oil production along the U.S.
Gulf Coast,10 an important source for U.S. production of
crude oil and natural gas.11 The past few hurricane seasons hampered activity in the Southern United States and
NOAA’s 2006 forecast gave energy markets another reason
to be cautious.
While it appeared that energy prices were poised to
end the year significantly higher as they had in 2004 and
2005, the last few months of 2006 saw a dramatic shift in
the upward trend that had marked the past few years. Petroleum prices fell sharply, 11.0 percent in September and
10.4 percent in October—the largest 2-month decline
since April and May 2003, when prices fell 23.8 percent.
Many of the geopolitical problems that had heightened
supply fears earlier in the year subsided in the fall.12 The
political situation in Iran abated somewhat as the United
Nations Security Council’s resolution deadline—giving
Iran until August 31st to suspend uranium enrichment
or face possible sanctions—passed without sanctions and
Iran renewed talks with the Western nations.13 The hostilities between Israel and Hezbollah ended in August.14
As for actual supply problems, BP, which had announced
it would be shutting down its Prudhoe Bay oil field in
August, was able to restore the oil field to full production
ahead of schedule.15 That announcement, coupled with
the fact that U.S. inventories were well above the 5-year
average for that time of year, contributed to the easing of
supply fears.16 Also, as the year came to an end, it became
apparent that the record-setting hurricane season of 2005
would not be repeated in 2006.17
While geopolitical issues remained a factor, especially
because the situation in Nigeria remained unstable, they
exerted less of an influence on oil prices.18 Previously, expectations of supply problems had led many oil market
participants to purchase additional inventories earlier in
the year. When the anticipated supply problems didn’t
occur, market participants then sold off contracts and
prices plunged.19
Natural gas prices fell in 2006, decreasing 28.4 percent,
partially reversing the large increases in 2004 and 2005
when prices jumped 42.5 percent and 54.9 percent, respectively. Natural gas prices had risen sharply following
Hurricane Katrina in 2005, due to damage to platforms
and underwater pipelines, but prices retreated in early
2006. Prices plummeted in February 2006, the largest
1-month drop since April 2003, and dropped further
in March when fears of shortages were reduced. Mild
weather coupled with high reserve levels held natural gas
Chart 3. Changes in the import petroleum prices index, December 2005 to December 2006
1-month percent change
Percent change
15
Percent change
15
10
10
5
5
0
0
–5
–5
–10
–10
–15
December
2005
February
2006
April
2006
Percent change
June
2006
August
2006
October
2006
12-month percent change
–15
December
2006
Percent change
50
50
40
40
30
30
20
20
10
10
0
0
–10
December
2005
February
2006
April
2006
June
2006
August
2006
October
2006
–10
December
2006
Monthly Labor Review • October 2007
Import and Export Price Trends
prices down for most of the year.20 The mild hurricane
season also helped keep both demand and prices stable
later in the year.
Two brief departures from the temperate weather
caused natural gas prices to jump a couple of times in
2006. First, a heat wave in August caused demand for
air-conditioning to peak, helping to push up natural gas
prices. Later, the first cold spell in November also pushed
prices for natural gas up 43.2 percent, the largest advance
since November 2004.
Nonfuel industrial supplies and materials. The price index for import nonfuel industrial supplies and materials
rose 11.3 percent in 2006, after a 4.4-percent advance in
2005.
Higher metals prices were the largest factor moving
the index up throughout 2006. Unfinished metals prices
increased across the board for most of the year, rising 34.3
percent overall. (See chart 4.) Prices for industrial metals
such as aluminum, copper, zinc, and nickel remained high,
as they have since the latter half of 2005, due to strong
demand and low stock levels.21 Precious metal prices also
remained strong as investors turned to precious metals such as gold and silver as a hedge against inflation.22
Prices for iron and steel mill products were below the record highs posted in 2004, but were still up 19.3 percent
for the year.
However, metals prices did not trend up throughout all
of 2006. Fears that interest-rate increases would lead to
diminished economic growth caused a market correction
in mid-May through mid-June.23 Most metals prices resumed their upward trend in July though, as investors regained confidence in the market. One exception was gold
prices which declined for several months in the fall as fuel
prices fell and the demand for hedge products weakened.
Gold prices resumed their upward trend in December and
increased 31.1 percent for the year.
Copper prices also diverged from the other metals
prices towards the end of the year, experiencing a 4month slide to close 2006. In May, strong industrial and
speculative demand as well as supply concerns pushed
copper prices to record levels on commodity markets,24
causing buyers to seek cheaper alternatives.25 As a result,
demand dampened and prices began to slide. A surplus in
the world refined copper market through October 2006
of 73,000 metric tons, compared with a 201,000 metricton market deficit for the same period in 2005, played a
role in the downward shift in prices as well.26 A slump
Chart 4. Changes in the import unfinished metals price index, 2006
12-month
percent change
12-month
percent change
45
45
40
40
35
35
30
30
25
25
20
20
15
15
10
10
5
5
0
January
0
March
Monthly Labor Review • October 2007
May
July
September
November
in construction/housing starts also contributed to reduced
demand for copper.
Chemicals prices remained relatively high in 2006,
increasing 4.4 percent. Higher oil prices put pressure on
petroleum and natural gas-based products such as plastics.
Strong demand for these products also contributed to the
upward pressure on prices.
Lower prices for building materials dampened the
overall increase for nonfuel industrial supplies and materials. Prices for building materials fell 5.4 percent in
2006. Housing starts, which had been strong in recent
years, fell 12.9 percent in 2006 leading to softer demand.27
An excess of supply of softwoods spruce, pine, and fir also
helped to push prices lower. In order to avoid penalties
from the Softwood Lumber Agreement, Canadian producers exported aggressively to pre-empt the impact of
the agreement which was signed on September 12, 2006.
Capital goods. Prices for capital goods reversed directions in 2006, with a 0.5-percent increase, after a 1.3-percent decrease the previous year. (See chart 5.) The change
was the first annual increase for the index since 1995
and is primarily attributed to increases in raw material
costs. Prices for capital goods excluding computers and
semiconductors increased 2.3 percent, almost double the
1.2-percent increase of 2005, and were the largest increase
for the index since 1994. Annual contract renegotiations
reflected higher material costs, namely for copper, steel,
aluminum, and fuel. However, a decline in copper prices
helped moderate increases in the index later in the year
as prices moved lower for the first time since June 2005.
For example, declining demand for copper used to make
wiring and other products for the depressed housing construction market, along with softer demand for appliances
and automotive vehicles, impacted the reverse in prices.28
Currency fluctuations impacted the index to a lesser extent. The Euro and U.K. pound contributed to upward price
movement, with the U.K. pound reaching a 14-month high
against the U.S. dollar in early December.29
Computers, peripherals, and semiconductors prices
declined 3.6 percent, following a much larger 6.5-percent decrease in 2005. The index declined throughout
the year with the exception of a 0.1-percent increase in
November—the first monthly advance for the index since
September 2003. Weak demand, market saturation, rapid
product innovation, increasing production efficiencies,
and intense competition continued to move prices downward in this industry.
Chart 5. Changes in the import capital goods, consumer goods, and automotive vehicles price indexes, 2006
12-month
percent change
2
12-month
percent change
2
1
1
0
0
Capital goods
–1
Consumer goods, excluding
automotives
–1
Automotive vehicles, parts and
engines
–2
January
March
May
July
September
November
–2
Monthly Labor Review • October 2007
Import and Export Price Trends
Automotive vehicles, parts and engines. The price index for
automotive vehicles, parts and engines increased 0.7 percent in 2006, the fifth consecutive annual increase for this
index. (See chart 5.) Strong sales for luxury cars in conjunction with higher raw material and energy costs pushed
prices for passenger vehicles and trucks up during most of
the year. The strengthening of the Euro against the U.S.
dollar also contributed to the increases at the beginning of
the year, while new model introductions in the latter part
of the year contributed to the upward movement.
The import parts index increased overall because of
higher metal and energy costs.
Consumer goods. Prices for import consumer goods, excluding automotives increased 1.4 percent in 2006, after
rising 0.6 percent in 2005. (See chart 5.) This was the
fourth consecutive and the largest increase since 2003.
Consumer goods prices were impacted more by changes
in the exchange rate than from raw materials prices, but
higher raw materials prices played a role in pushing up
import consumer prices in 2006.
Import consumer prices began the year higher, as typically many companies implement annual contract adjustments at the beginning of the year. Higher metals prices
began to impact import consumer goods prices in May
when a sharp upturn in costs for precious metals, specifically gold, pushed up prices for jewelry.
Most consumer goods categories increased over the
year, most notably coins, gems, and jewelry, which was
up 22.1 percent for 2006. Home entertainment equipment was the only area where prices declined, falling 3.6
percent over the year. Similar to 2005, production cost
savings pushed prices lower due to economies of scale and
competition.
Foods, feeds, and beverages. Prices for imported foods,
feeds, and beverages rose 4.3 percent in 2006, after larger
increases of 5.4 percent in 2005 and 8.0 percent in 2004.
This index has risen each year since 2002.
Vegetable prices had a significant upward impact on
the import foods, feeds, and beverages index, but the increase for vegetables was less than in recent years. Vegetable prices increased 7.0 percent in 2006, compared
with an 18.0-percent advance in 2005 and a 21.6-percent
increase in 2004 when several hurricanes battered Florida
and Mexico. Early in the year, vegetable prices fell sharply
when supply finally began to return back to pre-hurricane
levels and demand for imported produce diminished as
domestic production resumed.30 Prices then remained up
for most of the rest of the year. Both fruit and vegetable
10 Monthly Labor Review • October 2007
prices increased as an excess of rain in the major growing
regions in Mexico and Central America put pressure on
supply.
Coffee prices ended the year up 13.8 percent despite
falling for most of the first half of 2006. After surging in
late 2005, coffee prices began to stabilize in February. Towards the end of the year, prices rose because of production problems in Vietnam and an anticipated reduction in
the 2007–08 Brazilian crop.31
Locality of Origin price indexes. As previously discussed,
petroleum prices moved upward during the beginning of
the year then dropped the latter half of the year, with a
number of Locality of Origin price indexes following the
same pattern. The indexes were driven upward by higher
petroleum prices from countries that export the product
to the United States, namely the European Union (EU),
Mexico, and Canada. However, increases from those
countries were smaller compared with 2004 and 2005, as
oil prices increased at a slower pace in 2006.
Manufactured goods from the EU rose 5.5 percent following a more moderate increase of 1.8 percent in 2005,
while nonmanufactured goods rose a modest 4.1 percent,
compared with the 17.2-percent increase in 2005 and the
37.3-percent increase in 2004. Increases in the EU price
index were also partially attributed to the strengthening of
the Euro and U.K. pound against the U.S. dollar. Manufactured goods from Latin America rose 3.0 percent, compared with 7.3 percent in 2005, while nonmanufactured
goods from the same region rose a modest 6.1-percent
in comparison with 41.9 percent in 2005. Manufactured
goods from Canada rose 2.7 percent, compared with 4.4
percent in 2005, rising for the fifth consecutive year, while
nonmanufactured goods declined 8.3 percent, reversing
the trend of increases over the past 4 years, when the index
rose 37.8 percent and 32.0 percent in 2005 and 2004, respectively. The Canadian price index for nonmanufactured
goods experienced its first decline in 5 years due to the
offsetting impact of lower natural gas and lumber prices
on higher petroleum prices.
Prices from Japan and China continued their downward trend, with both indexes falling 1.2 percent. The
annual change in prices for commodities from Japan has
consistently declined since November 2005. The annual
change in prices for commodities from China has steadily
declined since December 2004, the first month of annual index calculations available for China, with annual
declines ranging from 0.5 percent to 1.4 percent. Figures
from Chinese customs show that in the first 11 months
of 2005, China exported to the United States 1.29 billion
pieces of knit goods worth 3.93 billion U.S. dollars, with
average unit price reaching 3.05 U.S. dollars, down 43.69
percent from the previous year. 32
Export price trends
Agricultural goods. The export agricultural goods price
index rose 13.5 percent in 2006, after a more modest 4.9percent rise in 2005.
Corn prices led the overall advance, rising 60.4 percent in 2006. Corn prices remained flat for most of the
year, but strengthened in the last months of 2006 due to
strong demand as well as a downward revision in the 2006
harvest.33 Although output remained historically strong,
growing demand and fears of supply shortages pushed
corn prices higher. The surge in demand for corn came
from the world’s livestock producers, most notably China,
as well as from U.S. ethanol producers as ethanol became
increasingly important as a fuel additive.
Strong global demand for crude oil combined with the
Energy Policy Act of 2005 and Federal tax credits stimulated an expansion of ethanol production in the United
States. With mandated increases in the use of renewable
fuels and the lack of liability protection for the popular
fuel additive methyl tertiary butyl ether (MBTE), the interest in ethanol as a replacement has increased.34
As in the past several years, soybean prices were also a
leading influence on the agricultural goods index. After
remaining stable in the latter months of 2005, soybean
prices fluctuated in the early part of the year. Prices slid
in April based on reaction to projections from the U.S.
Department of Agriculture that U.S. farmers planned
to increase soybean planting,35 but rose in May as rainy
weather force farmers to delay planting.36 Soybean prices
rose sharply in November and ended the year up 14.1
percent. The atypical fall price increase resulted from the
surge in corn prices which had a residual impact on soybeans as farmers switched acreage from soybeans to corn
to take advantage of higher prices in the corn industry.
Wheat rose 25.7 percent in 2006, compared with 4.9
percent in 2005. Wheat prices increased due to lower
projected crop yields in 2006 as a result of drought in
some parts of the country.
Nonagricultural industrial supplies and materials. Export
nonagricultural industrial supplies and materials prices
were up 9.2 percent in 2006, after increasing 8.5 percent
in 2005. The rise was the fifth consecutive increase for
this index and the second largest increase over that 5-year
period after a 16.6-percent advance in 2004.
Much of the increase for export nonagricultural industrial supplies and materials prices can be attributed
to higher fuel prices. Prices for export petroleum and
petroleum products increased 11.6 percent in 2006. Export petroleum product prices reflected import petroleum
prices—that is, rising in the first two-thirds of the year
before declining—for the same reasons.
Higher gasoline prices, which make up a larger percent
of export trade than import trade, also contributed to the
increase. Strong demand and higher crude oil prices account for some of the advance, but reduced inventories
also contributed to higher gasoline prices. Lower inventories were due partly to refinery maintenance that had
been deferred from last fall.37 Reduced inventories also
resulted from the switch from MBTE to other gasoline
additives.38 Gasoline prices declined in the fall along with
crude petroleum prices; the end of the summer driving
season also contributed to the drop in prices.
Export nonferrous metals prices also continued to
increase, rising 41.5 percent in 2006, twice the increase
as the year before. As with import metals prices, robust
demand buoyed prices for industrial metals while investor
demand pushed up prices for precious metals as a hedge
against inflation.
Chemical prices increased slightly in 2006, rising 1.5
percent. Chemicals prices rose because of higher petroleum prices.
Capital goods. Prices for exported capital goods increased
1.1 percent in 2006, following a 0.5-percent decrease in
2005. This was the largest increase for the index since an
1.8-percent increase in 1995. The price index for capital
goods excluding computers, peripherals, and semiconductors increased 3.0 percent, compared with 2.1-percent
increases in both 2004 and 2005. The 2006 increase was
the largest for this index since 1991. As with imports, the
increase was dominated by rising material costs, namely
metals and energy; however, several price decreases took
place towards the end of the year, including a reversal in
copper prices, which helped to temper these increases.
The strengthening of the Euro against the U.S. dollar also
contributed to the increase in the index. Because the indexes are priced in U.S. dollar terms, prices for a small but
growing number of items reported in foreign currencies
are converted to U.S. dollars, resulting in higher dollar
prices for the items.
Computers, peripherals, and semiconductors prices declined 4.8 percent, following a much larger 7.1-percent
decrease in 2005. As with imports, weak demand, market
saturation, rapid product innovation, increasing producMonthly Labor Review • October 2007 11
Import and Export Price Trends
tion efficiencies, and intense competition continued to
drive prices down in the industry overall. The computer
price index continued to decline and the semiconductor
price index moved down steadily throughout the year.
Price declines resulted from newer technology, manufacturing efficiencies, and weak demand. For example, in the
semiconductor industry, the newest chips on the market
have circuits with lines less than 0.13 microns across—less
than one-thousandth the width of a human hair. The finer
the lines, the more transistors can be packed onto the
same chip and the more transistors on a chip, the faster
the data can be processed. Fierce competition and new
technologies have the ability to lower the cost of production per chip within a matter of a month, causing the price
of a new chip to drop by half.39
Similar to capital goods prices, higher prices for export
consumer goods were partially attributable to the falling
dollar.
Services. Air passenger fares were driven by exchange
rates, higher fuel prices, and strong demand in 2006, after
being moved mainly by exchange rates in 2005. Import
air passenger fares rose 7.8 percent in 2006, almost twice
the 2005 increase of 4.1 percent. High fuel prices led the
advance, although higher demand also contributed to the
increase as well. Export air passenger fares rose 7.0 percent in 2006, resuming an upward trend, after declining
4.3 percent in 2005. Exchange rates were the primary
reason for the increases, as the weaker dollar led to higher
fares early in the year.
Air freight rates were affected by rising fuel surcharges
Automotive vehicles, parts and engines. The price index as well as the depreciation of the U.S. dollar versus several
for automotive vehicles, parts and engines continued to European currencies. Import air freight rates rose 1.8
trend upward, increasing 1.5 percent in 2006, compared percent in 2006, following a similar 1.7-percent increase
with a more moderate 1.0-percent rise the year before. in 2005. Export air freight rates rose 4.2 percent in 2006,
The only decline of the year occurred in November as a following a 5.6-percent increase in 2005.
result of a late-year downturn in steel prices, which imInbound ocean liner freight prices declined 10.1 perpacted auto parts. The index for automobiles and trucks cent in 2006, the first decrease since an 8.1-percent drop
increased 0.6 percent, with increased manufacturing and in 2001 (prices were up 3.3 percent in 2005). Early in
raw material costs as the primary contributor impacting the year, many companies renegotiated their contracts and
this index. Steel and fuel costs, along with other metals rates fell due to excess capacity and competition. These
costs were responsible for the material increases.
contract renegotiations impacted the index in late spring
The index for auto parts ended the year 2.3 percent and early summer, causing a 3-month drop of 10.4 percent
higher than in 2005, again with increased raw materials from May to July. Rates were expected to drop dramaticosts for steel, aluminum, plastics, fuel, and by July, rubber cally in 2006 due to forecasts of overcapacity,40 but strong
impacted prices as well.
demand moderated the fall in rates.
The inbound crude oil tanker price index fell 20.1 perConsumer goods. Export consumer goods prices increased cent in 2006, after falling 17.2 percent in 2005. Prices
2.1 percent in 2006 after rising 0.7 percent last year. The started 2006 on an upward trend due to the after effects
2006 advance was the fourth consecutive and largest in- of Hurricane Katrina. Oil production along the Gulf of
crease since the index began trending upward in 2003.
Mexico had been reduced for a period, thereby increasing
Export consumer goods prices increased for many of the demand for imported oil. However, prices dropped
the same reasons as the import measures—exchange rate significantly beginning in March as capacity began to
pressures and higher raw materials costs. The index began increase. Many refineries in the Northern Hemisphere
the year up and remained up for most of the year. The underwent routine maintenance in the spring which relargest increase occurred in January when the index rose sulted in excess capacity. The maintenance period came to
0.4 percent in conjunction with annual contract adjust- an end in June just as summer demand began to pick up,
ments. Sharply higher gold prices also led to a jump in pushing prices up. Prices remained steady throughout the
the prices of jewelry.
remainder of the year.
Notes
1
EIA Petroleum Marketing Monthly (U.S. Department of Energy, Energy
Information Agency), June 2006 (with data for March 2006).
12 Monthly Labor Review • October 2007
2
EIA This Week in Petroleum (U.S. Department of Energy, Energy Information Agency, Feb. 23, 2006) .
3
Steven Mufson, “Investors Push Oil Over $70 a Barrel; Worries about
Iran, Nigeria Contribute,” The Washington Post, Apr. 18, 2006, p. D01.
4
EIA This Week
in Petroleum, Aug. 9, 2006.
5
EIA
6
Ibid, Apil 2006 (with data for January 2006).
7
Ibid, May 2006 (with data for February 2006).
Petroleum Marketing Monthly, August 2006 (with data for May 2006).
8
See the following EIA Petroleum Marketing Monthly: June 2006 (with data
for March 2006); July 2006 (with data for April 2006); September 2006 (with
data for June 2006); and October 2006 (with data for July 2006).
9
“Prices Soar as Tension in the Middle East Grows,” Petroleum Economist,
August 2006, p. 1.
10
NOAA Predicts Very Active 2006 North Atlantic Hurricane Season (National
Oceanic and Atmospheric Administration, May 22, 2006).
11
EIA This Week
in Petroleum, June 7, 2006.
Petroleum Marketing Monthly, December 2006 (with data for September 2006).
12
EIA
13
See Heather Timmons, “Oil Contract Dips Briefly Below $60 a Barrel, as Speculators Bet on Lower Prices,” The New York Times, Sept. 26, 2006,
p. C3; and EIA Petroleum Marketing Monthly, December 2006 (with data for
September 2006).
14
EIA
2006).
Petroleum Marketing Monthly, November 2006 (with data for August
15
Heather Timmons, “Oil Contract Dips Briefly Below $60 a Barrel,” The
New York Times, Sept. 26, 2006, p. C3.
16
EIA This Week
in Petroleum, Oct. 18, 2006.
17
See Return of El Niño Yields Near Normal 2006 Atlantic Hurricane Season (National Oceanic and Atmospheric Administration, Nov. 30, 2006) and
EIA Petroleum Marketing Monthly, December 2006 (with data for September
2006).
18
EIA
2006).
19
Petroleum Marketing Monthly, January 2007 (with data for October
EIA This Week
in Petroleum, Oct. 4, 2006.
Natural Gas Year-In-Review 2006 (U.S. Department of Energy, Energy Information Administration, March 2007).
20
EIA
21
Platts staff, “Copper jumps to new highs on stock declines, supply fears,”
Platts Metals Week, Mar. 27, 2006, p. 1.
Ann Davis, “Rush of Investors to Commodities Fuels Gold Rally; Price of
Oil, Other Raw Materials Could Also be Buoyed by Stampede to Field Seen in
Past as too Risky,” The Wall Street Journal, Apr. 11, 2006, p. C.1.
22
Ann Davis, “Commodities Join Broader Decline; Some Experts See Resilience in Asset Class, Suggesting Global Growth Has Legs,” The Wall Street
Journal, June 9, 2006, p. C.4.
23
24
Platts staff, “Cochilco predicts average prices of 260–264¢/lb in 2006,”
Platts Metals Week, May 1, 2006, p. 10.
25
Platts staff, “Higher copper prices resulting in some substitution: trade,”
Platts Metals Week, May 8, 2006, p. 2.
26
“Copper prices will slip, but not collapse in 2007,” Purchasing, Feb. 15,
2007: B8, ProQuest, ProQuest-CSA LLC, May 30, 2007, on the Internet at
http://proquest.umi.com.
27
According to data obtained from the U.S. Census Bureau, there were an
estimated 1,800,700 housing units started in 2006. This was a 12.9-percent decrease from 2005. See U.S. Census Bureau News Joint Release U.S. Department of
Housing and Urban Development (U.S. Bureau of Census and U.S. Department
of Housing and Urban Development, Jan. 18, 2007).
28
“What you’ll pay,” Purchasing, Jan. 18, 2007: 46, ProQuest, ProQuest-CSA
30, 2007, on the Internet at http://proquest.umi.com.
LLC, May
29
“UK: Finance Outlook,” EIU ViewsWire, Dec. 12, 2006: ProQuest, ProQuest-CSA LLC, June 1, 2007, on the Internet at http://proquest.umi.com.
30
Domestic vegetable production was disrupted by the severe hurricanes of
the past few years leading to shortages that caused an increase in demand for
imported products.
31
2006.
Letter from the Executive Director, Coffee Market Report, November
32
“Slipping unit price of Chinese textile export may lead to antidumping
actions: organization,” People’s Daily Online, Jan. 20, 2006, on the Internet at
http://english.people.com.cn/200601/20/eng20060120_237044.html (visited
June 22, 2007).
33
“The decreased supplies and very strong cash and futures prices boosted
projected prices received by farmers 40 cents on both high and low ends of the
range to $2.80 to 3.20 per bushel, compared with $2.00 in 2005/2006,” Feed
Outlook (U.S. Department of Agriculture, Nov. 14, 2006).
34
Paul C. Westcott, “Ethanol Expansion in the United States: How Will
the Agriculture Sector Adjust” (U.S. Department of Agriculture, May 2007),
p. 2
35
Oil Crops Outlook (U.S. Department of Agriculture, Apr. 11, 2006).
36
Ibid, May 15, 2006.
37
Some refineries deferred their routine fall maintenance in order to keep
operating after the 2005 fall hurricanes. Moreover, some refineries had not yet
become fully operational after being damaged by the hurricanes. EIA This Week
in Petroleum, May 24, 2006.
38
The switch from MBTE to ethanol “coincided with the seasonal changeover to less-evaporative summer-grade gasoline.” This resulted in a decrease in
the volume of gas produced. Beth Heinsohn, “A Respite at the Pump,” Barron’s,
Sept. 11, 2006, p. M16. See also Eliminating MTBE in Gasoline in 2006 (U.S.
Department of Energy, Energy information Agency, Feb. 22, 2008).
39
“The Industry Handbook–The Semiconductor Industry,” Investopedia,
June 22, 2007, on the Internet at www.investopedia.com/features/industryhandbook/semiconductor.asp.
40
“A number of analysts and consultants predicted that freight rates would
collapse because of the massive oversupply of new ships scheduled for delivery during the year. Despite their own internal forecasts that supply would not
outstrip demand significantly, a number of liner companies cut freight rates
to maintain their market share.” Special Report: Trans-Pacific Maritime, on
the Internet at www.joc-digital.com/joc/20070305/templates/pafeviewer_
print?pg=15&pm=2 (visited June 5, 2007).
Monthly Labor Review • October 2007 13
| File Type | application/pdf |
| File Title | Import and export price trends in 2006 |
| Subject | Import and export price trends in 2006 |
| File Modified | 2009-06-09 |
| File Created | 2007-11-02 |