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International Trade: Modestly Narrower on Export Gains

February 7, 2017

Bottom Line: The trade deficit narrowed modestly in December with both exports and imports increasing moderately. On a trend basis, both exports and imports are growing again at nearly the same pace, holding the trade deficit in the $38-46B range, where it has been for nearly 5 years . Net exports made a moderate negative contribution to the advance 2016 Q4 GDP growth estimate; the Q4 average for real trade balance for goods suggests this will be revised to be slightly less negative.

The International Trade Deficit NARROWED by $1.5 billion to $44.3 billion in December, compared with market expectations for an increase to a $45.0 billion deficit. For 2016, the trade deficit averaged $41.9 billion, slightly above from the average of $41.7 billion for 2015.

Exports ROSE by 2.7% to $190.7 billion after a decline of 0.2% in the prior month. The declines in food, feed, and beverages were more than offset by increases in capital goods and industrial supplies and materials. Export growth is now 4.2% ABOVE their year ago level.

Imports ROSE by 1.5% to $235.0 billion after an increase of 1.2% in the prior month. The declines in other goods were more offset by increases in motor vehicles and parts, industrial supplies and materials. In December, oil imports decreased. Oil imports 2016 year-to-date levels are now moderately below the 2015 year-to-date levels. Imports are now 4.6% ABOVE their year ago level.

Article by Contingent Macro Advisors