Import and Export Prices, 2003
which was up 4.5 percent for the year, fertilizers, insecticides, and pesticides prices, along with plastics prices, were the major contributors. Higher energy prices increased feedstock costs, which in turn pushed chemicals prices up. Unfinished metals also increased for the second consecutive year, by 8.4 percent, following an 11.4-percent rise in 2002. Gold and silver prices increased over the year due to speculative fund buying, as investors saw these metals as a safe alternative to other financial assets. Furthermore, favorable economic news, such as improvements in GDP growth and a declining unemployment rate, in the latter part of the year helped push up spot prices for platinum and other base metals, such as copper, nickel, and aluminum, reflecting hopes for a pickup in future demand for these production inputs. In addition, an expansion in manufacturing in Asia, particularly in China, helped boost demand for metal inputs, thereby creating upward pressure on worldprices.4 Indeed, China’s demand for platinum in the jewelry sector was instrumental in sending platinum prices to 23-year highs.
Higher base-metal prices affected prices for finished metals, which rose 4.3 percent in 2003 after declining 1.1 percent in 2002. Prices for steelmaking and ferroalloying materials, along with prices for iron and steel products, increased over the year, up 19.4 percent and 6.2 percent, respectively. Although inclement weather early in the year, political nervousness over Iraq and Venezuela, and high energy prices affected the supply side of the world steel market, international demand for scrap was heavy, particularly in Asia. Domestically, a weak dollar and tariffs on imported steel caused the quantity of imported steel products to decline by more than 40 percent in 2003.5
Prices for building materials (such as lumber and panels) also pressed higher in 2003, up 13.7 percent for the year, following a modest 2.3-percent increase in 2002. Although demand was off in the first quarter of the year due to the slow winter season combined with market concerns over affairs in the Middle East, purchasing picked up in late spring because of low mortgage rates and strong housing starts, the latter up 15 percent for the year.6 In August, plywood prices surged due to a large U.S. Government purchase for rebuilding Iraq and an increase in demand with Hurricane Isabel’s arrival.7
The price indexes for paper and paper base stocks, for textile supplies and related materials, and for agricultural industrial supplies and materials all increased in 2003. Woodpulp prices rose a sharp 16.6 percent, the result of a first-quarter turnaround in prices due to weather-related industry shortages and energy costs. Textile supplies prices increased 4.0 percent for the year, reflecting higher cotton and energy prices and a weakened U.S. dollar. Finally, prices for agricultural industrial supplies and materials increased 4.6 percent in 2003, led by a surge in rubber prices. World prices for natural rubber increased primarily in the last 4
Monthly Labor Review
months of 2003, due to strong demand from tiremakers, increased market demand from China, and heavy rains in Southeast Asia that constricted supplies.8
Capital goods. Capital goods represent approximately 28 percent of U.S. imports and include many products, such as electrical generating equipment; computers, peripherals, and semiconductors; and transportation equipment, excluding motor vehicles. The capital-goods category was the only major import category to decline in 2003, falling 1.1 percent. This index has declined every year since 1995 and has trended with the steady decline in prices for computers, peripherals, and semiconductors—55.8 percent over the last decade. Since the end of the technology boom of the 1990s, computer and semiconductor sales have slumped along with sales of telecommunications equipment. Concomitantly, with rapid innovation keeping manufacturing costs low and the industry undergoing consolidation, prices have continued to decline steadily. Semiconductor sales showed a promise of rebounding in 2003, fueled by strong worldwide demand (particularly from Asia).9
Prices for capital goods, excluding computers, peripherals, and semiconductors, increased 1.2 percent in 2003, reversing the trend over the previous decade. The price index for electrical generating equipment increased 2.0 percent over the year. This index, along with prices for nonelectrical machinery, excluding computers, peripherals, and semiconductors, which rose 0.9 percent over the year, was influenced by exchange-rate effects and higher costs for raw materials. Similarly, prices for transportation equipment, excluding motor vehicles, increased 1.8 percent in 2003, the result of higher input costs, higher fuel prices, and the depreciation of the dollar.
Consumer goods. Consumer goods account for approximately 24 percent of U.S. imports. In 2003, consumer goods prices rose a modest 0.1 percent, the first annual increase since a 1.8- percent rise in 1995. Price movements within the consumer- goods category were mixed; price increases for manufactured nondurables and for nonmanufactured consumer goods offset a decline in prices for manufactured durables. Manufactured nondurables prices were affected, in general, by raw materials costs, along with exchange rates, while the decline in prices for manufactured durables was the result of declines in home
entertainment equipment prices.
Automotive vehicles, parts, and engines.
makes up about 17 percent of U.S. imports, and prices were up 0.9 percent in 2003, following a 0.5-percent increase in 2002 and a 0.2-percent decline in 2001. All subcategories of automotives, parts, and engines had price increases in 2003. Historically, most increases occur in the fall of each year with the introduction of new models.