Econoday Report: International Trade March 13, 2009

International Trade

Released on 3/13/2009 8:30:00 AM For January, 2009

	Prior	Consensus	Consensus Range	Actual
Trade Balance Level	$-39.9 B	$-38.1 B	$-44.5 B to $-31.0 B	$-36.0 B

Highlights
The U.S. trade gap in January shrank again as exports and imports competed to see which could fall the fastest. The overall U.S. trade deficit narrowed to $36.0 billion from a revised $39.9 billion shortfall the month before. The January number was significantly smaller than the consensus forecast for a $38.1 billion gap.

In January, exports fell 5.7 percent while imports dropped 6.7 percent. The improvement in the overall deficit, however, was essentially in the oil gap. The January oil deficit decreased to $14.7 billion from $18.8 billion in December. The nonoil goods deficit was little changed at $31.4 billion from $31.3 billion the month before.

The oil deficit was pulled down by both lower prices and barrels imports. The average price of imported oil declined to $39.81 per barrel in January from $49.93 per barrel the previous month. The number of barrels of crude oil imported in the U.S. actually fell 6.2 percent.

Year-on-year, overall exports fell to down 22.8 percent in January from down 9.3 percent in December while imports worsened to down 14.7 percent from down 15.4 percent the previous month.

Today's report show shows trade improvement solely due to fewer oil imports. The bad news is the recession overseas is shrinking exports worldwide – including for the U.S. More specifically, this is not good for U.S. manufacturers. The numbers should not be seen as favorable for stocks but the equity markets seem to be in their own zone right now – count on this report being ignored.

Market Consensus Before Announcement
The U.S. international trade gap in December continued to contract, once again due to a drop in oil prices and a fall in import demand. But exports also dropped again. The overall U.S. trade deficit shrank to $39.9 billion from a $41.6 billion gap the month before. The December narrowing was led by the oil deficit which decreased to $18.8 billion from $19.7 billion in November. The nonoil goods deficit also shrank to $31.6 billion from $32.9 billion the month before. We can expect continued softening in both exports and imports as both the U.S. and overseas economies fall further into recession.

Definition
International trade is composed of merchandise (tangible goods) and services. It is available nationally by export, import and trade balance. Merchandise trade is available by export, import and trade balance for six principal end-use commodity categories and for more than one hundred principal Standard International Trade Classification (SITC) system commodity groupings. Data are also available for 36 countries and geographic regions. Detailed information is reported on oil and motor vehicle imports. Services trade is available by export, import and trade balance for seven principal end-use categories. Why Investors Care

Exports grow when foreign economies are strong. The weaker the foreign exchange value of the dollar, the less expensive goods and services are to foreigners, and this also helps spurt export activity. Imports grow when U.S. economic growth is robust. Imports are also spurred by a strong foreign exchange value of the dollar.

Data Source: Haver Analytics

The international trade balance has posted a deficit almost continuously since the 1980s. Any trade deficit is a drag on U.S. GDP growth, but a smaller deficit adds to growth, while a larger deficit decreases GDP growth.

Data Source: Haver Analytics

2009 Release Schedule

Released On: 1/13 2/11 3/13 4/9 5/12 6/10 7/10 8/12 9/10 10/9 11/13 12/10

Released For: Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct