The international trade balance measures the difference between imports and exports of both tangible goods and services. Imports may act as a drag on domestic growth and they may also increase competitive pressures on domestic producers. Exports boost domestic production. Why Investors Care
| Released on 2/13/07 For Dec 2006 | ||||||||||||
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Highlights
The U.S. trade gap widened to $61.2 billion in December from a revised $58.1 billion deficit in November. December's figure was worse than consensus forecasts which called for a $59.8 billion deficit. The increase in the trade deficit was primarily due to a jump in imports-primarily oil. In December, overall exports rose 0.6 percent, following a 1.1 percent jump in November. Overall imports increased 2.1 percent in December, following a 0.3 percent boost in November. The merchandise trade gap (Census basis) widened to $66.4 billion from a revised $62.9 billion deficit in November. The goods gap excluding petroleum widened but not by as much-to a shortfall of $45.7 billion from $44.1 billion in November.
On the import side, merchandise imports rose $3.81 billion. Increases were led by industrial supplies and automotive, which were up $1.64 billion and $1.51 billion, respectively. Industrial supplies include petroleum imports. Oil imports rose by $0.79 billion. Imports of consumer goods posted a $0.80 billion increase.
On the export side, merchandise gains were led by automotive and foods, feeds, & beverages, which rose $0.52 billion and $0.26 billion, respectively.
The oil trade deficit widened in December to $20.7 billion from $18.8 billion in November. Crude oil prices in December rose to $53.84 per barrel from $52.25 per barrel in November.
On a bilateral basis, the deficit with China narrowed to $19.0 billion in December from $22.9 billion in November on an unadjusted basis. The gap with Japan decreased to $7.5 billion from $7.9 billion.
Today's report reminds us that swings in oil prices can still impact the trade deficit significantly and should weigh on the dollar. Importantly, exports continue to grow and are supportive of U.S. manufacturing. Given that oil prices have seen declined (net), we can expect some improvement in the trade gap looking ahead.
The U.S. international trade gap narrowed to $58.2 billion in November from a revised $58.8 billion shortfall in October. In November, overall exports rose 0.9 percent, while overall imports increased 0.3 percent. Gains in exports have helped support manufacturing and any sign of weakness in exports will not bode well for the industrial sector. However, November exports were boosted by a spike in shipments of civilian aircraft and a technical reversal or partial reversal should be expected. It may be hard to get a solid read on the true trend from the December data.
International trade balance Consensus Forecast for December 06: -$59.8 billion
Range: -$62.5 billion to -$57.0 billion
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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. |
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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. |
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