Introduction
Earlier today, the Labor Department released producer price data covering July. According to Labor, the Producer Price Index rose 0.1% during the month, reversing June's 0.3% decline. Elsewhere, the Commerce Department reported a horrifying record trade deficit during June. June's red ink came in at $55.8 billion, an $8.9 billion increase from May.
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July PPI
In today's report on July producer prices, the Labor Department reported an increase of 0.1%. The food component fell 1.6%, while the energy component rose 2.3%. The increase in energy reversed June's 1.6% decline. Considering the behavior of energy prices during August so far, it is likely energy will be a source of upward pressure on the August PPI, when it is reported in September.
The July PPI, excluding food and energy -- the so-called "core" rate -- rose 0.1%.
Year over year through July, producer prices rose 4.0%. For the three months ended July, the PPI was up at an annual rate of 2.5%. Some of the slowing in the three-month rate of change comes from a Labor Department revision to April date, which is incorporated into the following table.
Consumer Producer Import
Price Index Price Index Prices
Month/ ---------------------------------------
Year Y/Y L3Mos* Y/Y L3Mos* Y/Y L3Mos*
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07/04 -Rel. 8/17- 4.0% 2.5% 5.5% 6.5%
06/04 3.2% 4.8% 4.0% 4.7% 5.6% 5.7%
05/04 3.0% 5.5% 4.9% 8.5% 6.8% 10.0%
04/04 2.3% 3.9% 3.6% 5.3% 4.6% 5.8%
03/04 1.7% 5.1% 1.5% 5.4% 1.1% 11.5%
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*Trailing three-month com-
pound annual rate of change.
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June Trade Deficit
Earlier today, the Commerce Department reported that the US trade deficit (goods and services) spiked in June to a record $55.8 billion, up a stunning $8.9 billion from May's revised shortfall of $46.9 billion. (The May figure was originally reported at minus $46.0 billion).
Exclusive of the net effect of other revisions to gross domestic product for 2004's second quarter, the influence of the net-export component is likely to be a negative one, based on this morning's report. (The Commerce Department will release its next estimate of second-quarter GDP on 8/27.)
Following are some June/May comparisons of goods-only deficits with selected countries/regions. These numbers come from data that are not seasonally adjusted.
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June Def. May Def.
Country/Region (Billions of Dollars)
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China $14.2 $12.1
W. Europe $10.7 $ 8.2
European Union $10.6 $ 7.9
Canada $ 6.6 $ 4.8
Japan $ 6.3 $ 5.5
OPEC $ 6.2 $ 5.6
Mexico $ 4.9 $ 3.8
Korea $ 2.0 $ 1.6
Taiwan $ 1.2 $ 1.0
Brazil $ 1.1 $ 0.4
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