Econoday Economic Report: International Trade August 11, 2010

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International Trade

Released On 8/11/2010 8:30:00 AM For Jun, 2010

	Prior	Consensus	Consensus Range	Actual
Trade Balance Level	$-42.3 B	$-42.5 B	$-46.2 B to $-40.0 B	$-49.9 B

Highlights
The U.S. appetite for imported goods rose in June – but not overseas as U.S. exports fell. The overall U.S. trade deficit spiked to $49.9 billion from $42.0 billion in May. The June shortfall was much larger than the market forecast for a $42.5 billion gap. Exports fell 1.3 percent, following a 2.5 percent gain in May. Overall imports advanced 3.0 percent in June after rising 2.8 percent the month before. Nonoil imports gained a sharp 4.7 percent, following a 6.1 percent spike in May.

The widening of the trade gap was primarily in non-oil. The nonpetroleum deficit widened to $40.0 billion in June from $32.2 billion the prior month. The petroleum goods gap, however, narrowed to $21.2 billion from $21.5 billion in May.

By end-use categories, the drop in goods exports was led by a $1.4 billion decline in capital goods excluding autos. Also slipping were industrial supplies, down $1.0 billion and foods, feeds & beverages, down $0.3 billion. Exports of consumer goods, and autos posted modest gains.

The advance in imports was widespread outside of oil. Consumer goods surged $3.1 billion; autos were up $1.3 billion; capital goods ex autos increased $0.5 billion; and foods, feeds & beverages rose marginally. Industrial supplies-which include oil-fell $0.2 billion.

Equities dipped further on the news. Already futures were down sharply after news of slower growth in China and a downgraded outlook from the Bank of England sent equities down overseas.

Market Consensus before announcement
The U.S. international trade gap expanded in May to $42.3 billion from $40.3 billion in April. Exports rebounded 2.4 percent while imports bounced back 2.9 percent. The worsening in the deficit was in the nonpetroleum portion. The nonpetroleum deficit widened to $32.3 billion in May from $27.8 billion the prior month. The petroleum goods gap, however, narrowed to $21.5 billion from $24.1 billion in April.

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

2010 Release Schedule

Released On: 1/12 2/10 3/11 4/13 5/12 6/10 7/13 8/11 9/9 10/14 11/10 12/10

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