Thursday, June 10, 2004

Are the days of overproduction behind us? The US Bureau of Labor Statistics recent release on import and export prices suggests it may have settled down for a long winter's nap. But don't start confidently poking that slumbering bear just yet.

Over the last 12 months import prices into the US have risen a whopping 7.0%. Granted a great deal of that is petroleum prices, up 43.9%. But non-petroleum import prices are up 3.0% y-o-y, much of that due to the global price surge for non-petroleum industrial supplies and materials, up 14.7% annually.

But once we get away from raw materials and into manufactured goods, global overproduction looks just as prominent as ever. Annual import prices for capital goods are actually falling, down 1.0%. Prices on nondurable manufactured consumer goods are up a mere 1.1%, auto sector imports up just 1.3%, and on durable manufactured consumer goods minus autos, price stability over the year.

Despite the global scramble over raw materials, overproduction is still the underlying game being played.

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