Current Price Topics

The Price Competitiveness

of U.S. Exports

1

Import and Export Prices: First Quarter 2010

U.S. Bureau of Labor Statistics May 2010 Volume 1, Number 1

Price is a key factor affecting the competitiveness 

of U.S. exports. When the prices of U.S. exports 

fall relative to the prices of similar products produced in other countries, the demand for U.S. exports grows. The Bureau of Labor Statistics (BLS) 

releases price indexes each month that show 

the average price movement for exports. These 

indexes measure items in U.S. dollar terms which, 

in effect, show the average price change that U.S. 

exporters receive for their products. Another factor that should be analyzed is the price competitiveness of U.S. exports. From the point of view 

of a buyer in a foreign country, how the price of 

U.S. exports changes in foreign currency terms 

is more relevant than how the price changes in 

U.S. dollar terms. The price trend for U.S. exports 

in any given foreign currency can differ from the 

price trend in U.S. dollar terms, depending on 

how the value of the U.S. dollar varies relative to 

that currency. For example, a buyer in Canada 

may purchase a U.S. item that increases 5 percent 

in U.S. dollar terms. However, if the Canadian 

dollar rises by 10 percent compared with the U.S. 

dollar over the same period, in Canadian dollar 

terms, the item is actually 5 percent cheaper.

90.0

95.0

100.0

105.0

Index Value

(January 2009 = 100)

Chart 1. U.S. dollar exports and foreign currency export price indexes, 

January 2009 - March 2010

U.S. dollar exports Foreign curren cy exports
Export prices in U.S. dollar terms have risen 

3.6 percent since the beginning of 2009. 

When viewed from the perspective of a broad 

range of foreign buyers, U.S. exports were on 

average 2.2 percent cheaper in March 2010 

than they were in January 2009. (See chart 1.) 

So despite the fact that exports were getting more expensive in U.S. dollar terms, they 

were more price competitive from the perspective of many purchasers of those exports.

An examination of how the U.S. dollar has 

moved since the beginning of 2009 could 

provide some insight on why the U.S. dollar price of exports has so differed from the 

foreign currency index over the same period. 

Continuing an upward trend dating from the 

second half of 2008, the U.S. dollar rose in 

value against the trade-weighted basket of 

major currencies through March 2009. The 

global financial crises that began in mid-2008 

led investors to favor the relative safety of 

U.S. Treasury bills, thus pushing the value of 

the U.S. dollar up. From March through the 

remainder of 2009, the U.S. dollar reversed 

trend and lost approximately 12 percent of 

its value against most major currencies. Although the U.S. dollar has remained stable 

against most major currencies through the 

early months of 2010, it has risen relative to 

the euro, thus pushing the trade-weighted 

value of the U.S. dollar up overall. (See 

chart 2.)

The impact of the movement of the U.S. 

dollar can be seen in the foreign currency 

index of U.S. export prices. Over the first 

4 months of 2009 the U.S. dollar price of 

exports was virtually unchanged; however, 

the rising value of the U.S. dollar over the 

same period resulted in export prices in 

foreign currency terms rising 3.4 percent. 

2

 C U R R E N T P R I C E T O P I C S

90.0

95.0

100.0

105.0

Index Value

(January 2009 = 100)

Chart 2. Nominal major currencies exchange rate index, 

January 2009 - February 2010

Nominal exchange rate index between the U.S. dollar and major c urrencies (monthly)

SOURCE: U.S. Federal Reserve 
3

Since April 2009, foreign currency export 

prices have declined 5.4 percent even 

though export prices rose 4.0 percent in U.S. 

dollar terms.

So, did more competitive export prices have 

an impact on the demand for U.S. export 

goods? Over the first 4 months of 2009, the 

U.S. dollar value of U.S. exports declined. 

(See chart 3.) From April through the end of 

2009, however, when the price of exports 

was falling in foreign currency terms, the 

value of U.S. export goods increased 24.0 

percent. The change in the value of the 

U.S. dollar was not the only variable that 

influenced the demand for U.S. exports, of 

course. Improved economic conditions following the global downturn at the end of 

2008 also were a factor, but worth noting is 

that the value of U.S. exports leveled off in 

January and February 2010 as the U.S. dollar 

has increased against a trade-weighted 

average of major currencies.

At present, U.S. export price indexes are 

only published in U.S. dollar terms. In order 

to look at U.S. export prices from a foreign 

currency perspective, as was done in this 

analysis, some measure of exchange rates 

is necessary to convert the U.S. dollar price 

index, produced by BLS, into foreign currency terms. This analysis made use of data 

produced by the Federal Reserve Board. The 

Federal Reserve produces a trade weighted 

exchange rate index between the U.S. dollar and a set of major currencies (defined as 

currencies that circulate outside the country of issue.) The Federal Reserve’s index is 

weighted by both U.S. export shares and 

a combination of U.S. and foreign import 

shares; in the absence of a pure exportweighted exchange rate index, the Federal 

 C U R R E N T P R I C E T O P I C S

60.0

70.0

80.0

90.0

100.0

110.0

65,000

75,000

85,000

95,000

105,000

115,000

125,000

Index value

(January 2009 = 100)

Millions of dollars 

Chart 3. Total dollar value of U.S. goods exports and foreign currency 

export price index, January 2009 - February 2010

Total goods exports (in millions of dollars) Foreign curren cy exports
Reserve’s major currencies index allows for a 

useful estimate of a U.S. export price index in 

foreign currency terms. The U.S. export price 

index in foreign currency terms is derived by 

taking the U.S. dollar price index multiplied 

by the exchange rate index divided by 100.1 

When the value of the U.S. dollar falls, U.S. 

exports on average get cheaper. Likewise, a 

rising U.S. dollar will mean that U.S. exports 

become relatively more expensive.

Deriving aggregate U.S. export prices in 

terms of a basket of foreign currencies is a 

relatively simple and useful exercise that is 

possible using the price data produced by 

BLS and exchange rate information from the 

Federal Reserve. But such analysis of U.S. 

export price competitiveness could be greatly 

expanded by looking at detailed product 

areas. For example, an in-depth study of the 

price of U.S. automobiles in foreign currency 

terms might add insight to how export share 

expansion could help the troubled industry 

recover. What would be needed is an average 

exchange rate index weighted by the trade 

partners for U.S. automobile exports. That 

index could then be multiplied by the respective U.S. dollar price index. Presently, such 

indexes are not produced anywhere, but in 

the future, the addition of average exchange 

rate indexes by product area could lead to a 

better measurement of the price competitiveness of U.S. exports in an increasingly globalized economy.

Import Prices 

Import prices rose 1.8 percent in the first 

quarter of 2010, continuing an upward trend 

dating back to the first quarter of 2009. Prices 

for overall imports in March 2010 rose 11.4 

4

Current Price Trends

Quarterly Price 

Highlights

 C U R R E N T P R I C E T O P I C S

-20

-15

-10

-5

0

5

10

15

Percent change

Chart 4. All imports and nonfuel imports 12-month percent change, 

March 2009 - March 2010

All imports Nonfuel imports

SOURCE: U.S.
5

percent compared to the same period a year ago 

and have been rising on a 12-month basis since 

November 2009. (See chart 4.) 

Approximately 74 percent of the first quarter 

advance in import prices was attributable to a 

6.2-percent increase in fuel prices, which rose 

two of the 3 months in the quarter. Nonfuel prices also rose over the 3 months ended in March, 

but at a comparatively modest 0.6 percent. The 

price index for nonfuel imports advanced 2.7 

percent between March 2009 and March 2010 

after declining on a 12-month basis for most of 

2009. 

Fuel Import Prices 

Fuel prices rose 6.2 percent between December 

2009 and March 2010. The advance was driven 

by a 6.5-percent jump in petroleum prices, 

which accounted for more than 96 percent of 

the overall increase. The world demand for oil 

rose on a yearly basis in the fourth quarter of 

2009, reversing a 5-quarter downward trend; 

that growth continued into the early months of 

2010. The increase was largely driven by a sharp 

jump in petroleum demand from China, which 

in January recorded a 28.0-percent jump, compared with January 2009. In addition, there are 

expectations that China will be building up its 

strategic reserves with petroleum prices at the 

current level.2

 The International Energy Agency 

forecasted in their March 12th report that world 

petroleum demand will grow 1.8 percent in 2010 

after falling 1.4 percent in 2009, with fully a third 

of the demand growth coming from China. 

While overall world petroleum demand has 

turned up in recent months, demand from the 

United States and Europe remains sluggish. 

In addition, the supply of oil rose in the first 

quarter of 2010. Although OPEC reaffirmed the 

production quotas set in December 2008 when 

they met on March 17th, compliance with the 

quotas has fallen to just 50 percent compared 

with 82 percent a year ago.3

 OPEC production 

hit a 14-month high in February before falling off slightly at the end of the first quarter.4

 

Beyond the fundamentals, another factor for 

petroleum prices rising the first 3 months of 2010 

was strong investment demand for oil. Investor 

demand for petroleum futures rose in anticipation of economic recovery in the U.S. and Europe 

leading to renewed fuel demand.5

 In addition, 

petroleum, like other commodities, is perceived 

as a store of value to protect investors against 

inflation and a long-term drop in the value of the 

U.S. dollar.

Higher natural gas prices also contributed to the 

overall increase in fuel prices, rising 4.7 percent 

over the first quarter. The index recorded a 19.6 

percent spike the first 2 months of 2010 after 

cold and snowy weather conditions led to an 

increase in the demand for heating fuels. The 

increase in natural gas prices during the first 2 

months of the year was tempered by a 12.4-percent drop in March that reflected that natural gas 

reserves remained 10.8 percent higher than the 

5-year average.6

 

Nonfuel Import Prices 

Excluding fuel, import prices advanced 0.6 

percent over the first quarter of 2010, continuing an upward trend for the index dating 

back to April 2009. The largest contributor to 

 C U R R E N T P R I C E T R E N D S
6

the overall rise in nonfuel import prices 

was nonfuel industrial supplies and 

materials prices. (See Chart 5.) As was 

the case in 2009, prices for unfinished 

metals led the way in the first quarter 

of 2010, rising 4.7 percent. The types of 

metals driving the increases differed, 

however. The 19.3-percent increase in 

unfinished metal prices in 2009 was led 

by sharp advances in gold, copper, and 

other precious metal prices in a reaction 

to the drop in the value of the U.S. dollar 

in 2009. For the first quarter of 2010, the 

increase was mostly led by a 7.5-percent 

increase in aluminum prices. Demand 

from China, the world’s largest consumer 

of aluminum, is expected to increase at 

least 20 percent in 2010 according to 

the Aluminum Corporation of China Ltd.7

 

Aluminum prices did turn down the final 

month of the quarter, falling 3.1 percent 

in March.

A 3.3-percent increase in chemicals prices 

and a 6.0 percent advance in building materials prices also helped push up the price 

index for nonfuel industrial supplies and 

materials in the first quarter of 2010. An 

11.4-percent jump in fertilizer prices, which 

fell 20.5 percent in 2009, drove the rise 

in chemical prices and was due in part to 

higher demand as buyers sought to replenish stocks in advance of the spring planting season.8

 Higher natural gas prices also 

helped push up fertilizer prices because 

natural gas is a key input for producing 

ammonia, which in turn is used to produce 

nitrogen-based fertilizers. Building materials prices rose in January and February due 

to poor weather impeding logging, which 

led to a reduced lumber supply. In March, 

U.S. wholesalers sought to replenish their 

stocks in anticipation of increased demand 

from builders with the improved conditions.9

 The earthquake in Chile on February 

 C U R R E N T P R I C E T R E N D S
2010, put downward pressure on all finished 

goods prices. In addition, import prices for 

computers, peripherals, and semiconductors 

fell 1.4 percent, led primarily by a 3.2-percent drop in semiconductor prices. The one 

notable exception to the declining price 

trend among finished goods was the price 

index for medicinal, dental, and pharmaceutical prices, which rose 2.7 percent in the first 

quarter and led the increase in consumer 

goods prices. 

Export Prices 

Export prices increased 0.9 percent the 

first quarter of 2010, the fourth consecutive quarter the index recorded an advance. On a 12-month basis, export prices 

rose 4.6 percent, the largest year-overyear increase since export prices rose 7.0 

percent from September 2007 to September 2008. (See chart 6.) The increase 

in export prices the first quarter of 2010 

 

 7

27th also affected world lumber prices as 

much of their forest products industry suffered damage from the earthquake.10

A 2.3-percent increase in foods, feeds, and 

beverages prices was a contributing factor 

to the overall price advance in nonfuel prices 

from December 2009 to March 2010. Higher 

prices for import vegetables, meat, and fruit, 

up 14.2 percent, 9.0 percent, and 6.7 percent, 

respectively, in the first quarter of 2010 all 

factored into the increase. 

Finished goods prices were mixed for the 

quarter ending in March. Capital goods prices 

and prices for automotive vehicles fell 0.5 

percent and 0.6 percent, respectively over the 

3 months while consumer goods prices rose 

0.4 percent. The rise of the value of the U.S. 

dollar, which increased 4.1 percent against 

a trade-weighted basket of major currencies between November 2009 and February 

 C U R R E N T P R I C E T R E N D S

-25

-20

-15

-10

-5

0

5

10

15

Percent change

Chart 6. All exports, agricultural exports and nonagricultural exports 

12-month percent change, March 2009 - March 2010

All exports Agricultural exports Nonagricultural exports
8

was entirely led by a 1.0 percent advance in 

nonagricultural export prices. In contrast, 

agricultural prices edged down 0.4 percent 

for the quarter ended in March 2010 following a 5.0-percent increase in the final quarter of 2009. Agricultural prices continued 

to rise on a 12-month basis, increasing 8.2 

percent for the March 2009-10 period.

Agricultural Export Prices 

Agricultural export prices declined 0.4 

percent overall for the quarter ended in 

March. The decrease was led by lower 

grain prices, which fell sharply in February. Soybean prices decreased 8.4 

percent for the quarter, a drop that was 

driven by an 11.6-percent decline in 

February. Export demand for soybeans 

remains strong, but an increase in the 

world supply of soybeans, largely the 

result of record production out of Brazil, is pushing prices down.11 Wheat and 

corn prices also fell in the first quarter 

of 2010. Wheat prices fell 8.5 percent 

overall as global wheat supplies have 

risen.12 Corn prices decreased 3.0 percent between December 2009 and 

March 2010 as larger foreign supplies 

of corn have increased the competition for, and subsequent reduction of, 

U.S. exports. Increased production from 

Argentina and South Africa were factors 

in the increased world corn output.13 

In contrast, meat and nut prices rose in 

the first quarter of 2010, largely offsetting 

the falling grain prices. The export price 

index for meat, poultry, and other edible 

animal products rose 7.4 percent for the 

December 2009–March 2010 period. Leading the increase was pork prices, which 

have risen as the supply of pork in the U.S. 

has decreased. There was a 3-percent drop 

in U.S. hog inventories the first 2 months 

 C U R R E N T P R I C E T R E N D S

0.04

0.04

0.05

0.96

0.00 0.20 0.40 0.60 0.80 1.00 1.20

Consumer goods,

Capital goods

Nonagricultural industrial 

supplies and materials

Chart 7. Major contributors to the 1.0-percent increase 

in the first quarter 2010 in export prices excluding agriculture
9

of 2010, and a 4-percent drop in hog births 

over the past year could lead to further 

supply reduction in the future.14 Export nut 

prices also rose in the first quarter of 2010, 

recording an 18.5 percent increase driven 

by a 15.0-percent jump in January. Growing 

Chinese demand for almonds, walnuts, and 

pecans drove the increase.15 

Nonagricultural Export Prices 

Nonagricultural export prices increased 1.0 

percent for the quarter ended in March. 

The rise was led by a 3.1-percent advance 

in nonagricultural industrial supplies and 

materials prices, although finished goods 

prices were also up for the quarter. (See 

chart 7.) Higher chemical and fuel prices 

were the main contributors to the first 

quarter advance. Chemical prices advanced 

4.0 percent because of a sharp jump in 

fertilizer prices and an increase in natural 

gas prices. Fuel prices advanced 4.1 percent 

over the past 3 months, with both rising 

fuel oil prices and prices for other petroleum products—which includes gasoline—

factoring into the increase. Cold temperatures in much of the U.S. played a part in 

the advance in fuel oil prices.

Each of the major finished goods areas rose 

in the first quarter of 2010, but by modest amounts compared to the increase in 

nonagricultural industrial supplies and 

materials prices. Capital goods prices ticked 

up 0.1 percent between December 2009 

and March 2010 as a 1.9-percent increase 

in transportation equipment prices more 

than offset declining prices for computers, 

semiconductors, and peripherals. The price 

index for computers, semiconductors, and 

peripherals fell 0.9 percent for the quarter 

despite a 0.6-percent increase in March. 

Export prices for automotive vehicles and 

consumer prices also increased for the December 2009–March 2010 period, rising 0.5 

percent and 0.3 percent, respectively. 

International Services Indexes 

Both import air passenger fares and export air passenger fares declined between 

December 2009 and March 2010 despite 

increases in March. Import air passenger fares decreased 1.6 percent, led by a 

10.0-percent drop in Asian fares over the 

3-month period. Export air passenger fares 

decreased 3.0 percent, a decline that was 

driven by a 3.1-percent drop in European 

fares. The first quarter is generally regarded 

as the low season when fares typically 

decline. Prices rebounded in March in 

response to increasing fuel prices. Notwithstanding the first quarter declines, import 

air passenger fares rose 11.0 percent for 

the year ended in March and export air 

passenger fares increased 6.8 percent over 

the same period. In addition to higher fuel 

prices, rising air travel demand and fewer 

seats contributed to the increasing price 

trend for air passenger fares.16 

Import air freight prices fell 4.8 percent for 

the first quarter of 2010. The decrease was 

driven by the rising value of the U.S. dollar in recent months which had a greater 

 C U R R E N T P R I C E T R E N D S
 C U R R E N T P R I C E T R E N D S

Notes

1 The average exchange rate index used to convert U.S. dollar price indexes into foreign currency indexes are lagged a month. The 

U.S. dollar price indexes have a reference period that is the first of the month. Therefore the price index for January measures price 

change from December 1st to January 1st. The appropriate exchange rate to use to convert that into foreign currency terms is then 

the average exchange rate for the month prior to the reference period. The price index for January would be converted using the 

average exchange rate over December.

 

2 Oil Market Report (International Energy Agency, March 12, 2010).

3 See “Total OPEC Output Falls 0.77% in March vs. February,” Dow Jones Newswires, April 1, 2010.

4 Oil Market Report (International Energy Agency, March 12, 2010).

5 See “Wall Street is driving up Oil Demand,” MSNBC.com, March 31, 2010.

6 Weekly Natural Gas Storage Report (U.S. Energy Information Administration, April 1, 2010).

7 See “Aluminum demand in China to rise 20%, Chalco says (Update 1),” Bloomberg Business Week, March 23, 2010.

8 See “Fertilizer producers still see strong U.S. spring,” Reuters, March 17, 2010.

9 Crow’s Weekly Market Report (Research Information Systems Incorporated (RISI), March 12, 2010).

10 See “The Chile Earthquake: Possible consequences for wood products markets,” Crow’s Weekly Market Report, March 12, 2010. 

11 World Agricultural Supply and Demand Estimates (U.S. Department of Agriculture, March 10, 2010).

12 World Agricultural Supply and Demand Estimates (U.S. Department of Agriculture, March 10, 2010).

13 World Agricultural Supply and Demand Estimates (U.S. Department of Agriculture, March 10, 2010).

14 Quarterly Hogs and Pigs Report (U.S. Department of Agriculture, March 26, 2010).

15 See “Early season market outlook,” Western Farm Press, April 5, 2010; “Walnut market strengthens in face of higher production,” 

Western Farm Press, March 3, 2010; and “A pleasing pecan price turnaround,” Western Farm Press, February 17, 2010.

16 See “Airfares rise 13% on summer rebound, Travelocity says (Update 2),” Bloomberg Business Week, April 5, 2010. 

10

impact than rising fuel prices. In contrast, 

export air freight prices increased 1.2 percent over the same period. 

For further information, please contact 

Dave Mead at 202-691-7101, or e-mail at 

Mead.Dave@bls.gov