Prices of goods imported into the U.S. fell in May, led by the biggest drop in petroleum costs since December 2008.
The 0.6 percent decrease in the import price index was less than the median forecast in a Bloomberg News survey and followed a revised 1.1 percent gain in April that was more than previously reported, Labor Department figures showed today in Washington. Prices excluding petroleum rose 0.5 percent for a second month, led by higher costs for capital goods and metals.
While global growth has boosted demand and pushed up costs for some commodities, limited wage pressures have allowed companies to keep a lid on prices of finished goods. Subdued inflation will give the Federal Reserve room to keep its benchmark interest rate near zero for an “extended period.”
“You have not yet seen the impact of the appreciation of the dollar on import prices in the U.S.,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. It’s “positive for the inflation outlook,” he said.
Manufacturing in the New York region expanded in June at a faster pace, signaling factories are driving the economic recovery. The Fed Bank of New York’s general economic index rose to 19.6, an 11th consecutive month of growth. Readings greater than zero signal expansion in the so-called Empire State Index that covers New York, northern New Jersey and southern Connecticut.
Stock-index futures held earlier gains following the reports. The contract on the Standard & Poor’s 500 Index climbed 0.7 percent to 1,094.2 at 8:43 a.m. in New York. Treasury securities were little changed.
Economists forecast the import price index would decrease 1.2 percent after a previously reported 0.9 percent gain for April, according to the median projection in a Bloomberg survey. The drop was the biggest since July 2009. Estimates of the 54 economists surveyed ranged from gains of 0.5 percent to declines of as much as 2 percent.
Compared with a year earlier, import prices rose 8.6 percent, more than the median forecast of a 7.9 percent gain in the Bloomberg survey. A jump in petroleum costs since last year is leading the boost in year-over-year comparisons for inflation indicators.
Crude Oil Imports
The cost of imported petroleum fell 5 percent in May. They were still up 36 percent compared with a year earlier. Excluding oil, prices rose 3.7 percent from May 2009.
Excluding all fuels, import prices increased 0.5 percent last month. They were up 3.6 percent compared with a year earlier, the biggest rise since October 2008.
The import-price index is the first of three monthly price gauges from the Labor Department. The department is scheduled to release the producer price index June 16 and the consumer price gauge on the following day.
“Recent data continue to show a subdued rate of increase in consumer prices,” Fed Chairman Ben S. Bernanke told the House Budget Committee on June 9. He noted that the crisis in Europe was contributing to “lower prices for oil and some other globally traded commodities.”
Economists surveyed by Bloomberg in the first week of June forecast the Fed won’t begin raising its benchmark rate from near zero until 2011. That compares to last month’s forecast for a quarter point increase in the fourth quarter of this year.
Prices of imported food increased 1.4 percent last month, compared with a 1.1 percent rise in April. They were up 8.5 percent from a year earlier.
Prices of imported automobiles, parts and engines were unchanged from April and increased 0.4 percent over the past 12 months.
Nissan North America, Inc. last week announced U.S. pricing for its Versa Sedan and Hatchback, with starting suggested retail price of $9,990, unchanged from 2009.
Costs for imported consumer goods excluding autos rose 0.1 percent last month, while prices of capital goods increased 0.2 percent, the most since July 2008.
Imported industrial supply costs excluding fuel rose 1.9 percent. Base metals prices increased 2 percent after a 4.2 percent surge.
The cost of goods from China increased 0.3 percent, while those from Japan rose 0.1 percent. Goods from Latin America fell 1.6 percent and those from the European Union rose 0.1 percent.
The dollar has risen 15 percent against the euro this year as concern emerged that Greece and possibly other countries in the European Union may default on their debt. A stronger U.S. currency will help hold down the price of imports from the region in coming months.
Dow Chemical Co. Chief Executive Officer Andrew Liveris told investors during a June 2 webcast from New York to “stop panicking” over the European debt crisis or Chinese efforts to cool growth. “Demand is good,” he said. April sales for Midland, Michigan-based Dow Chemical, the world’s second-largest chemical maker, topped the monthly average in the first quarter and May was probably stronger.
U.S. export prices increased 0.7 percent after rising 1.2 percent in April. Prices of farm exports jumped 1.4 percent, while those of non-farm goods increased 0.6 percent.