Econoday Economic Report: International Trade May 12, 2010

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International Trade

Released On 5/12/2010 8:30:00 AM For Mar, 2010

	Prior	Consensus	Consensus Range	Actual
Trade Balance Level	$-39.7 B	$-41.0 B	$-42.0 B to $-38.6 B	$-40.4 B

Highlights
The March trade gap widened to $40.4 billion from a slightly revised deficit of $39.4 billion in February. Imports and exports jumped 3.1 percent and 3.2 percent respectively. The trade gap, which was smaller than the expected $41.0 billion was due in part to sharp increases in both the price and quantity of energy imports. Trade deficits with most major trading partners widened including those with China, Japan and the European Union.

The petroleum goods gap widened to $24.8 billion from $23.0 billion in February. However, the nonpetroleum gap narrowed thanks to the large export increase. And combined with a larger services surplus it suggests that excluding petroleum, the overall gap would have narrowed. Other imports categories posted solid gains, particularly auto imports. At the same time, exports of industrial supplies, which include some energy products, and consumer goods posted solid gains.

The unadjusted crude oil barrel price rose to $74.32 which is the highest since October 2008, while the volume of crude oil imports rose to 299.5 million.

Market Consensus before announcement
The U.S. international trade gap widened in February on both oil and non-oil imports. The trade deficit for February grew to $39.7 billion from a revised $37.0 billion the month before. The worsening in the trade deficit was led by the nonpetroleum balance which widened to $27.2 billion from $25.6 billion in January. The petroleum deficit came in at $22.9 billion, compared to $22.5 billion in January. Look for a further widening in the gap in March based on higher oil prices.

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

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