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International Trade:  Better Than Expected But Not Enough Turn Trend Yet

August 4, 2017

Bottom Line: The trade deficit narrowed slightly more than expected in June as exports of capital goods and feedstock rose while imports fell just slightly. The 3-month average deficit is roughly in-line with the 6-month average, which is still wider than the 12-month average and the average trade deficits in 2015 and 2016. Thus, the trend remains towards widening but is showing hints of stabilizing.

The International Trade Deficit NARROWED by $2.7 billion to $43.6 billion in June, compared with market expectations for an increase to a $44.5 billion deficit. For the first 6 months of the year, the trade deficit has averaged $46.1 billion, moderately above from the average of $41.6 billion for the same period in 2016.

Exports ROSE by 1.2% to $194.4 billion after an increase of 0.4% in the prior month. The declines in consumer goods were more than offset by increases in capital goods and food, feed, and beverages. Export growth is now 5.8% ABOVE their year ago level.

Imports FELL 0.2% to $238.0 billion after a decline of 0.1% in the prior month. The declines in industrial supplies and materials and consumer goods were partially offset by increases in motor vehicles and parts and other goods. In June, oil imports decreased. Oil imports 2017 year-to-date levels are now moderately below the 2016 year-to-date levels. Imports are now 4.6% ABOVE their year ago level.

Article by Contingent Macro Advisors