April’s strength for import & export prices not only didn’t help consumer prices they proved one-month wonders as import prices fell a sharper-than-expected 0.3 percent in May with export prices down a very steep 0.7 percent.
Prices for petroleum imports did fall sharply in May, down 3.9 percent, but weakness is spread through components as the non-petroleum reading could do no better than unchanged. Prices for durable imports fell a very noticeable 0.5 percent while readings for finished goods are thoroughly flat.
The export side also reflects wide weakness. Agricultural exports fell 1.6 percent in the month but the non-agricultural reading is also lower, down 0.6 percent. Finished goods prices on the export side are also flat.
Price weakness is becoming an unwanted and very unexpected theme for the 2017 economy, weakness that points to troubles for demand and lack of wage punch for workers.
Imports vs Exports Year-Over-Year
Exports add to GDP but imports subtract. The second chart helps explain the rising deficit nicely.
Mike “Mish” Shedlock