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Economy in Brief

Record U.S. Trade Deficit Suffered Triple Whammy
by Tom Moeller November 10, 2005

The combination of higher oil prices, higher gasoline imports and lost aircraft exports due to the Boeing strike pushed the September U.S. foreign trade deficit deeper to a record $66.1B from a little revised $59.2B in August. Consensus expectations had been for less of a deepening to $61.0B.

Imports of goods & services surged 2.4% in September. Petroleum imports jumped another 4.4% (58.7% y/y) as the per barrel price of crude petroleum rose 8.9% to $57.32 (52.8% y/y) though the value of crude oil imports fell 7.0% due to refinery shutdowns following Hurricane Katrina. Offsetting that decline, however, was a nearly one quarter surge in the value of imports of fuel oil & gasoline.

Imports of nonpetroleum goods surged 2.4% (10.1% y/y) in September as foods, feeds & beverages jumped 4.1% (17.6% y/y) and industrial supplies & materials surged 6.2% (33.0% y/y) additionally reflecting a 30.0% spike in natural gas (88.05 y/y).

Capital goods imports also rose a strong 0.9% (8.8% y/y) as imports of advanced technology products jumped 3.7% (NSA, 11.0% y/y). Imports of nonauto consumer goods jumped 2.6 (10.7% y/y) though imports of autos, parts & engines fell 3.5% (+3.7% y/y).

Total exports collapsed 2.6% due to a 7.4% drop in capital goods exports, driven by the four-week strike at Boeing Co. which caused exports of civilian aircraft to drop $2.4B or 72.3% m/m. Also, exports of advanced technology products more than reversed all of the prior month's gain with a 7.9% drop (NSA, -0.8% y/y). Finally, Gulf port closings contributed to the 5.8% m/m decline in exports of foods, feeds & beverages though these declines were dampened by a 4.1% (12.3% y/y) rise in nonauto consumer goods exports.

Services exports surged 1.6% (10.9% y/y) due to a 1.8% (13.0% y/y) jump in private travel and a 3.0% (18.1% y/y) spike in "other" private transportation services.

The US trade deficit with China deepened sharply to a record $20.1B ($161.9B in 2004) due to a 4.2% (NSA, 26.8% y/y) surge in imports that was accompanied by a 17.8% drop in exports (NSA, +11.9% y/y). The US trade deficit with Japan again improved slightly m/m to $6.4B ($75.6B in 2004) while the monthly trade deficit with the Asian NICs deepened for the fifth consecutive month to $1.5B ($21.9B in 2004). The deficit with the European Union improved slightly to $10.1B ($109.3B in 2004) due to a 1.9% (3.5% y/y) gain in exports.

Foreign Trade Sept Aug Y/Y 2004 2003 2002
Trade Deficit $66.1B $59.3B $51.9B (9/04) $617.6B $494.8B $421.2B
  Exports - Goods & Services -2.6% 1.5% 7.7% 12.6% 4.6% -3.0%
  Imports - Goods & Services 2.4% 1.8% 14.5% 16.6% 8.5% 2.1%
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