MARKET & ECONOMICSUS import prices fall 0.4% in November

Lower prices for American goods exported overseas are pressuring profit margins for corporations. The reports did not change views the Federal Reserve will raise interest rates next Wednesday for the first time in almost a decade. The four-week moving average of claims, considered a better measure of labour market trends as it strips out week-to-week volatility, rose only 1,500 to 270,750 last week.

While numbers took a dip, it is the 40th straight week for claims to remain under 300,000 – the longest stretch since the 1970s.

As the labour market approaches full employment there is probably little room for further declines. Labor market tightness is expected to spur faster wage growth and gradually push inflation toward its target. The four-week moving average of the so-called continuing claims rose 16,500 to 2.18 million.

Import prices dropped 0.4 per cent from the prior month, the Labor Department said Thursday, driven by a decline in fuel prices.

In the 12 months through November, the PPI declined 1.1 percent after sliding 1.6 percent in October. Excluding the volatile food and energy categories, core prices also rose 0.3 percent, and are up just 0.5 percent in the past year. Those prices are 12.8% lower compared to year-ago levels.

Final demand prices decreased 0.4% in October and 0.5% in September. As the dollar gains strength against the euro and other currencies, it makes foreign products relatively cheaper for USA consumers. November’s increase was attributable to an increase in prices for final demand services. But here too, the deflationary pull is widespread, with non-agricultural export prices down 0.6%. In contrast, the index for final demand goods moved down 0.1%.

Prices have been on a downward trend throughout this year, slipping each month with the exception of May and June.