Tag Archives: Exports

New Measures of Prices for Global Trade

Shipping containers sitting on a dock at a port.How do prices for U.S. manufacturing exports compare to prices for goods manufactured abroad? How has the balance of export and import prices between the United States and Mexico changed over time? BLS has new measures to answer these and other questions on the competitiveness of U.S. production. We have published data on import and export price indexes since 1973. Since then we have made many improvements to the data we provide. Our latest improvements are the locality of destination export price indexes and the U.S. terms of trade indexes.

What are the locality of destination indexes?

Each locality of destination index measures price changes in dollars for U.S. goods exported to another country, region, or group of countries. These include major U.S. trade partners like China and the European Union. The indexes are available for all goods and for manufacturing and nonmanufacturing goods industries for some localities. The locality of destination indexes are a counterpart to the locality of origin import price indexes, which we have published since 1990. The locality of origin indexes let us examine price trends for goods imported from other countries, regions, and groups of countries.

What do the locality of destination indexes tell us?

The locality of destination indexes show how export price movements can vary depending on where U.S. goods are sold. For instance, from August to September 2018, prices for manufacturing exports to Latin America increased 0.3 percent. During the same period, manufacturing export prices to the European Union did not change. Comparing the two price movements, we can conclude market prices for U.S. exports arriving in Latin America increased relative to exports bound for Europe. Identifying these trends allows data users to dig deeper to see how currency exchange rates or shifts in global supply and demand affect price movements across trade partners.

What are the terms of trade indexes?

Each terms of trade index measures the purchasing power of U.S. exports, in terms of imports, for a specific country, region, or group of countries. In other words, the terms of trade index for China provides information on the price for exports to China, and how those export prices compare to prices for imports coming from China. Prices for exports and imports are measured in U.S. dollars, so exchange rates are already taken into account. We calculate the terms of trade index for China by dividing the China export index by the China import index, then multiplying by 100. An increase in the China terms of trade index means prices for exports to China are rising faster than prices for imports from China.

What does a terms of trade index price change mean?

A change in a terms of trade index provides information on the competitiveness of U.S. goods in the global market. Take the previous example, an increase in the China terms of trade index. U.S. producers are receiving higher prices for exported goods, meaning U.S. companies can now afford to purchase more imports. The U.S. terms of trade—or competitiveness—with China have improved. When looking at the trends, remember that the types of goods U.S. businesses export to and import from China are different, and underlying price changes may have different causes.

How broad is the coverage of the terms of trade indexes?

We have terms of trade indexes for each country, region, or group of countries where we publish both a locality of destination export index and a locality of origin import index. These countries include major trading partners:

  • Canada
  • Mexico
  • Germany
  • China
  • Japan

They also include regions or groups of countries:

  • Industrialized Countries (Western Europe, Canada, Japan, Australia, New Zealand, and South Africa)
  • European Union
  • Latin America (Mexico, Central America, South America, and the Caribbean)
  • Pacific Rim (China, Japan, Australia, Brunei, Indonesia, Macao, Malaysia, New Zealand, Papua New Guinea, Philippines, and the Asian Newly Industrialized Countries)

We publish the terms of trade indexes and the locality of destination indexes monthly. Data are available beginning with December 2017.

Why did we develop these new indexes?

The locality of destination and terms of trade indexes come from an ongoing effort to better measure the competitiveness of U.S. goods. We began expanding our measures of competitiveness in 2010 by extending the locality of origin import indexes to more detailed industries. Next we began work on the locality of destination and terms of trade indexes, eventually introducing them in September 2018.

Want to learn more?

Why This Counts: What are the U.S. Import and Export Price Indexes?

Cargo ship in port at nightThe U.S. Bureau of Labor Statistics provides data of all kinds for workers, jobseekers, students, employers, investors, and policymakers. Most BLS measures provide information on U.S. labor markets and living conditions: the national labor force participation rate; the unemployment rate in Illinois; the Consumer Price Index for Anchorage, Alaska. But did you know we also provide international data? With a focus on global trade, we publish the U.S. import and export price indexes.

What are import and export prices indexes?

Import and export price indexes describe changes in the prices for goods and some services exchanged between people and businesses in the United States and trading partners around the world. BLS collects prices of imported and exported products from businesses and calculates price trends monthly.

A brief history of international prices:

  • BLS published the first import and export price indexes in 1973.
  • We published the first all-goods price indexes for imports in 1983 and for exports in 1984.
  • Monthly publication launched in 1989 and expanded in 1994.
  • Import price indexes by country of origin began publication in 1992.

What is an import? An export?

To measure import and export prices, we first need to define “import” and “export.” An import is any product entering the United States from a foreign country; an export goes the opposite direction. A good becomes an import or export when it crosses the border. An imported service is bought by a U.S. resident from a foreign resident, while an exported service is sold by a U.S. resident to a foreign resident.

What is a price index?

A price index measures the average change in prices for a basket of the same products over time. We measure price changes for thousands of imports and exports each month. We publish these price changes for specific products and for the specific industries and U.S trading partners that import or export the products. To learn more about price indexes, see our blog about the Producer Price Indexes.

How do we collect the data?

Like the Consumer Price Index and Producer Price Indexes, the import and export price indexes depend on the cooperation of businesses—in this case, U.S. establishments importing and exporting goods and services. Thousands of public-minded businesses voluntarily provide data through a monthly survey. With all the data we collect, we strive to minimize the burden on our respondents and protect their confidentiality and privacy.

What do import and export prices measure?

If you’ve ever taken an introductory economics course, you know markets determine price changes through supply and demand. On the most basic level, import and export price indexes measure how supply and demand affect prices for goods and services traded internationally. Let’s look at a quick example, the export price index for computers. A U.S. computer manufacturer may look at current trends to figure out short-term sales strategies. Then consider the flip side—the price index for import computers. A U.S. resident shopping for a new computer may want to research whether prices have risen or fallen over the past few months. Or that computer shopper might look at the data from the past few years to see if there is a certain time of year that prices fall. But the importance of import and export prices extends even further than individuals and companies.

  • The indexes are used to account for inflation in other official U.S. statistics like trade balances published by the Census Bureau and the international accounts for U.S. Gross Domestic Product published by the Bureau of Economic Analysis.
  • When economists calculate measures of U.S. industries’ competitiveness compared with our trading partners, they use import and export price indexes.
  • A change in the import price index can tilt domestic inflation in the same direction.
  • When exchange rates between currencies rise and fall, the indexes can show how much of that change is “passed-though” to an import or export price.

Why do import and export price indexes data matter?

The data matter because U.S. consumers depend on imports! Simply put, many of the products sold to consumers in the United States are imported from abroad. And there is a good chance what you buy for your home depends on import prices. But consumers aren’t the only ones who care about these prices. U.S. producers sell abroad and buy from overseas. Producers care about import prices because many imports to the United States go into the goods and services produced domestically. U.S. auto manufacturers care about the prices of auto parts they import from abroad. Producers who export goods to foreign countries benefit from having access to price information. Knowing trends in export agricultural prices, for example, could influence what crops a U.S. grower chooses to produce.

Want to find out more?

President’s 2016 budget would fund data on export prices and poverty measures

A few weeks ago President Obama presented his fiscal year 2016 budget request to Congress. That budget proposes $632.7 million in funding for BLS, an increase of $40.5 million over our fiscal year 2015 funding. The 2016 budget proposes new funding to help BLS meet some important data needs. I have asked David Friedman, the acting Associate Commissioner for Prices and Living Conditions, to explain how we plan to use the proposed funding to improve prices and consumer spending information.

The President’s 2016 budget asks Congress to restore funding that would let BLS continue producing and publishing export price indexes. These indexes measure the price change of goods and services U.S. firms sell to foreign buyers. In fiscal year 2014, we announced plans to stop publishing export price indexes because of reduced funding. However, before we carried out the planned cuts, the Administration looked for and found other temporary funding sources. This money is only enough to produce and publish export price indexes until September 30, 2015. This budget proposal would allow us to continue producing and publishing export price indexes in fiscal year 2016 and beyond.

BLS publishes import and export price indexes, and both are critical for understanding how our nation’s economy connects to the world economy. Export price indexes help policymakers and businesses understand trends in trade balances and how well U.S. firms compete in international markets. The Bureau of Economic Analysis uses export price indexes to estimate real Gross Domestic Product, which measures all the goods and services the nation produces. BLS measures of productivity and costs also rely on export price indexes. A recent Beyond the Numbers article showed that no other data sources are substitutes for export price indexes.

The President’s 2016 budget also proposes funds for BLS to produce spending measures that would help the U.S. Census Bureau measure poverty more accurately. Poverty measures are essential for understanding hardship and prosperity in our economy. Other federal agencies use these measures to improve conditions for the poor. The official U.S. poverty measure began in the 1960s and has not changed substantially since then. Many observers have criticized the measure for several flaws. In particular, it does not account for many government aid programs. The alternative poverty measures the Census Bureau would produce from BLS spending data would not replace the official measure; instead they would provide a broader view of hardship. If Congress funds this proposal, it would allow us to:

  1. Release consumer spending data more quickly to help the Census Bureau produce alternative poverty measures each year.
  2. Add questions to the Consumer Expenditure Survey on topics such as school breakfasts and lunches and help paying for home heating and other household expenses.
  3. Continue research to improve how federal agencies measure poverty.

If Congress funds the BLS proposal in the coming year, it would allow us to strengthen our partnership with the Census Bureau on this important national issue. Without the funding, our ability to be a full participant in development and maintenance of the supplemental poverty measure is not possible.