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Import and Export Prices, 2003

concerns about avian lu in Asia led to a widespread slaughter of chickens on that continent.

Agricultural industrial supplies and materials increased 15.3 percent in 2003, following a 9.2-percent rise in 2002. Prices for cotton and tallow were the primary contributors to the 2003 increase. Also, China’s demand for cotton imports has grown by nearly 600 percent in the last year.13 Meanwhile, world stocks of cotton were low in 2003, and the combined result of this, together with China’s rising demand, was an increase in cotton prices. Prices for tallow, which is an animal fat and a substitute for soybean and other oils, followed increases in soybean oil prices. Relatively low slaughter counts resulting from the Canadian cattle embargo added to the upward pressure on tallow prices.14

Nonagricultural

industrial

supplies

and

materials.

The

category of nonagricultural industrial supplies and materials accounts for about 22 percent of U.S. exports and includes goods such as energy, metals, paper, chemicals, industrial textiles, rubber, and building materials. The price index for this category

rose

6.3

percent

in

2003,

up

from

a

4.8-percent

increase

in

2002.

Prices

for

chemicals

and

metals

were

the

major

contributors

to

the annual increased in

increase; prices for fuels and building supplies 2003 for reasons similar to their import counterparts.

Export prices for steel, woodpulp, and synthetic rubber increased substantially in 2003. Rising energy prices and heavy demand from Asia—China in particular—caused ferrous scrap prices to soar. The export woodpulp industry similarly benefited from Chinese demand, offsetting the economic downturn of the domestic pulp and paper sector since the most recent U.S. recession. In addition, prices for synthetic rubber, a substitute for natural rubber, followed the upward movement of world prices for that commodity.

Capital goods.

On the export side, capital goods represent

approximately 46 percent of the volume of U.S. trade. As with the import side, prices for capital goods for export declined in 2003. The 0.6-percent drop followed declines of 0.8 percent and 1.3 percent in 2001 and 2002, respectively. Prices for computers, peripherals, and semiconductors, down 4.3 percent over the past year and 47.7 percent over the past decade, are the primary mover of capital-goods prices. Import and export prices for computers and semiconductors have behaved similarly, the result of a competitive industry and declining manufacturing costs. Also contributing to the annual decline in capital-goods prices were telecommunications equipment

Notes

1 Annual percent changes are calculated from December to December, unless otherwise specified. Data are not seasonally adjusted.

2

3

Federal Open Market Committee Statement, May 6, 2003. The 2003 import and export price indexes are based on trade dollar

8

Monthly Labor Review

September 2004

prices, which fell 4.3 percent in 2003 and 3.0 percent in 2002.

After finding themselves overinvested in infrastructure at the end of the technology boom of the 1990s, telecommunications firms have been forced to restructure debt and cut costs in the face of strong competition. Consumer demand, however, remains strong as well.15 The other components of capital goods— nonelectrical machinery (excluding computers, peripherals, and semiconductors) and transportation equipment (excluding motor vehicles)—posted annual increases of 0.4 percent and 3.1 percent, respectively. As with their import counterparts, higher input costs and foreign currency effects contributed to the

increases.16

Consumer goods.

After falling 0.6 percent in 2002, prices for

consumer goods rose 0.6 percent in 2003, as each subcategory of the consumer goods price index increased. Increases in the price indexes for household goods, for medicinal, dental, and pharmaceutical preparatory materials, and for recreational equipment more than offset modest price declines for apparel and footwear and for home entertainment equipment.

Automotive vehicles, parts, and engines. The price index for exported automotive vehicles, parts, and engines increased 0.5 percent in 2003. Domestic automakers faced higher costs for raw materials such as steel and rubber. Canada and Mexico are the largest markets for U.S. cars, trucks, and parts. Although up slightly in 2003, auto exports to Canada remain somewhat below 2000 levels. The volume of auto exports to Mexico dropped by more than 10 percent in 2003 and was nearly 18 percent below 2000 levels.17

Services.

The price index for export air passenger fares, a

measure of changes in foreign travel fares paid to foreign carriers by U.S. residents, recorded an increase of 14.7 percent in 2003. During the first half of the year, the airline industry faced increases in jet fuel costs and a downturn in demand due to Middle East tensions and the outbreak of severe acute respiratory syndrome (SARS). In general, sea- sonal price changes tend to dominate the industry. The price index for export air freight, a measure of changes in rates paid for the transportation of freight from the United States to foreign countries on U.S. carriers, increased 0.2 percent last year, as adjustments to fuel surcharges led to increased prices in the early part of the year, followed by small declines

thereafter.

values for the year 2000. Beginning with the January 2004 import and export price indexes, the Bureau has been updating its weights on an annual basis, with, however, a 2-year lag.

4

See “A copper-bottomed boom?” The Economist, Oct. 2, 2003.

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