U.S. Trade Deficit Increases With Economic Recovery

Economic recovery hit the U.S. trade accounts with a double-whammy during November. It generated a 2.6% m/m rise in imports and it increased the international trade deficit to $36.4B which was the highest since January. The rise followed October's deficit of $33.2B which  was revised up slightly from the initial estimate. Export growth lagged with a 0.9% increase that followed two months of stronger increase. The latest figure was quite a bit higher than Consensus expectations for a deficit of $34.5B.

Imports rose 2.6% in part due to a rise in crude oil prices to $72.54 per barrel which was the highest level since October of 2008. Overall, however, the gain in petroleum imports was held back by a 4.6% m/m decline (-8.2% y/y) in the quantity of energy-related products. U.S. economic recovery continued to be apparent in a 1.5% increase (-6.3% y/y) in real nonoil imports which was the fifth increase in six months. Real non-auto capital goods imports jumped 3.5% (-13.0% y/y) after a 2.8% September rise. Real nonauto consumer goods imports surged 3.7% and by 12.5% since June. These are turnarounds from earlier sharp declines. Real automotive vehicles & parts imports, however, slipped 0.4% (-0.1% y/y) but they were up by one-half since the spring. Real capital goods imports also have been strong and rose 3.6% for the fourth increase in five months. They have risen 14.5% since June. Finally, services imports rose a modest 0.3% (-4.0% y/y) for the fifth increase in six months. U.S. travels abroad were discouraged by the lower dollar. Travel imports slipped 0.9% (-7.1% y/y and passenger fares rose 1.5% (-25.6% y/y).

Reflecting the competitive value of the dollar, nominal exports rose 0.9% m/m and by 13.6% from the April low. Adjusted for price inflation, however, the gain is more impressive. Though real merchandise exports slipped 0.6% during November (-4.4% y/y), they have risen 13.9% since April. Offsetting a 5.4% decline (-2.3% y/y) decline in real non-auto consumer goods exports was a 9.0% rise in auto exports (-6.1% y/y) and a 0.4% uptick (-7.6% y/y) uptick in real capital goods exports. Exports of services ticked up 0.2% (-0.8% y/y) following earlier strong monthly gains.

By country, the trade deficit with mainland China lessened to $20.2B, its least since June, as exports rose 41.4% y/y and imports fell 2.5%. With Japan, the trade deficit deteriorated to $5.4B from 5.1B one year earlier as exports fell 16.3% while imports fell just 4.4%. With the European Union, the trade deficit deteriorated to $6.4B as exports declined 9.4% y/y and imports fell a lesser 5.3%.

The international trade data can be found in Haver's USECON database. Detailed figures are available in the USINT database.

The Determinants of International Flows of U.S. Currency from the Federal Reserve Bank of New York can be found here.