| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Balance | $-92.0B | $-98.0B to $-80.4B | $-98.4B | $-78.2B | $-78.9B |
Highlights
The international trade deficit for December widened sharply to $98.431 billion after $78.940 billion in November. The change is not unexpected, but larger than the consensus for a deficit of $92.0 billion in the Econoday survey of forecasters. The goods deficit is 18.2 percent greater at $122.969 billion in December, while the services surplus is down 2.3 percent to $24.448 billion.
Exports of goods and services are down 2.6 percent to $266.507 billion in December with exports of goods down 4.2 percent to $170.173 billion and services up 0.5 percent to $96.334 billion. Exports of consumer goods are down $1.8 billion, industrial supplies down $1.8 billion, capital goods down $1.4 billion, and automotive $0.9 billion. The surplus for services is mostly due to a $0.3 billion increase in travel.
Imports of goods and services are up 3.5 percent to $364.939 billion in December with goods imports up 4.0 percent to $293.141 billion and services up 1.4 percent to $71.797 billion. Imports of industrial supplies is up $10.8 billion, consumer goods is up $2.2 billion, capital goods up $1.3 billion, and down $2.2 billion. Imports of services rise mostly from increases of $0.5 billion in transport and $0.3 billion.
The trade deficit with Europe widens to $33.333 billion in December from $23.466 billion in November. The deficit of trade in December with China was little changed at $24.980 billion from $24.994 billion in the prior month. The trade deficit with Japan grew to $5.885 billion from $5.450 billion.
Exports of goods and services are down 2.6 percent to $266.507 billion in December with exports of goods down 4.2 percent to $170.173 billion and services up 0.5 percent to $96.334 billion. Exports of consumer goods are down $1.8 billion, industrial supplies down $1.8 billion, capital goods down $1.4 billion, and automotive $0.9 billion. The surplus for services is mostly due to a $0.3 billion increase in travel.
Imports of goods and services are up 3.5 percent to $364.939 billion in December with goods imports up 4.0 percent to $293.141 billion and services up 1.4 percent to $71.797 billion. Imports of industrial supplies is up $10.8 billion, consumer goods is up $2.2 billion, capital goods up $1.3 billion, and down $2.2 billion. Imports of services rise mostly from increases of $0.5 billion in transport and $0.3 billion.
The trade deficit with Europe widens to $33.333 billion in December from $23.466 billion in November. The deficit of trade in December with China was little changed at $24.980 billion from $24.994 billion in the prior month. The trade deficit with Japan grew to $5.885 billion from $5.450 billion.
Market Consensus Before Announcement
Trade in goods for December was already reported at a wider than expected $122 billion, up from $104 billion in November. Forecasts for the goods & services deficit look for a big jump in the overall deficit to $92.0 billion from $78.2 billion in November. That translates to weaker GDP for Q4.
Definition
Updating the goods portion of the advance report and offering initial data on services, this report provides complete information on cross-border trade. Merchandise trade is available by export, import and trade balance for six principal end-use commodity categories and for more than one hundred principal commodity groupings. Data are also available for 48 countries and 7 geographic regions. Detailed information is reported on oil and motor vehicle imports. Services trade is available by export, import and trade balance for seven principal end-use categories.
Description
Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect the value of the dollar in the foreign exchange market.
Imports indicate demand for foreign goods and services here in the U.S. Exports show the demand for U.S. goods in countries overseas. The dollar can be particularly sensitive to changes in the chronic trade deficit run by the United States, since this trade imbalance creates greater demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation. This report gives a breakdown of U.S. trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.
Importance
The international trade balance on goods and services is the major indicator for foreign trade. While the trade balance (deficit) is small relative to the size of the economy (although it has increased over the years), changes in the trade balance can be quite substantial relative to changes in economic output from one quarter to the next.
Interpretation
Market reaction to this report is complex. Typically, the smaller the trade deficit, the more bullish for the dollar. Also, stronger exports are bullish for corporate earnings and the stock market.
Both the level and changes in the level of international trade indicate relevant information about the trends in foreign trade. Like most economic indicators, the trade balance is subject to substantial monthly variability, especially when oil prices change. It is more appropriate to follow either three-month or 12-month moving averages of the monthly levels.
It is also useful to examine the trend growth rates for exports and imports separately because they can deviate significantly. Trends in export activity reflect both the competitive position of American industry and the strength of domestic and foreign economic activity. U.S. exports will grow when: 1) U.S. product prices are lower than foreign product prices; 2) the value of the dollar is relatively weaker than that of foreign currencies; 3) foreign economies are growing rapidly.
Imports will increase when: 1) foreign product prices are lower than prices of domestically-produced goods; 2) the value of the dollar is stronger than that of other currencies; 3) domestic demand for goods and services is robust.
The international trade report does show bilateral trade balances with our major trading partners. Since the value of the dollar versus various foreign currencies does not always move in tandem, we can see a narrower or wider trade deficit with different countries. In the 1980s and 1990s, the U.S. trade deficit with Japan often caused political problems. During the next 20 years the deficit with China began to grow rapidly and, like Japan, once again caused political problems. While American consumers benefit from weak imports, American workers often lose their jobs as these goods are no longer produced in the United States. Ideally, the United States would be exporting (high end) goods that other countries don't produce.
Imports indicate demand for foreign goods and services here in the U.S. Exports show the demand for U.S. goods in countries overseas. The dollar can be particularly sensitive to changes in the chronic trade deficit run by the United States, since this trade imbalance creates greater demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation. This report gives a breakdown of U.S. trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.
Importance
The international trade balance on goods and services is the major indicator for foreign trade. While the trade balance (deficit) is small relative to the size of the economy (although it has increased over the years), changes in the trade balance can be quite substantial relative to changes in economic output from one quarter to the next.
Interpretation
Market reaction to this report is complex. Typically, the smaller the trade deficit, the more bullish for the dollar. Also, stronger exports are bullish for corporate earnings and the stock market.
Both the level and changes in the level of international trade indicate relevant information about the trends in foreign trade. Like most economic indicators, the trade balance is subject to substantial monthly variability, especially when oil prices change. It is more appropriate to follow either three-month or 12-month moving averages of the monthly levels.
It is also useful to examine the trend growth rates for exports and imports separately because they can deviate significantly. Trends in export activity reflect both the competitive position of American industry and the strength of domestic and foreign economic activity. U.S. exports will grow when: 1) U.S. product prices are lower than foreign product prices; 2) the value of the dollar is relatively weaker than that of foreign currencies; 3) foreign economies are growing rapidly.
Imports will increase when: 1) foreign product prices are lower than prices of domestically-produced goods; 2) the value of the dollar is stronger than that of other currencies; 3) domestic demand for goods and services is robust.
The international trade report does show bilateral trade balances with our major trading partners. Since the value of the dollar versus various foreign currencies does not always move in tandem, we can see a narrower or wider trade deficit with different countries. In the 1980s and 1990s, the U.S. trade deficit with Japan often caused political problems. During the next 20 years the deficit with China began to grow rapidly and, like Japan, once again caused political problems. While American consumers benefit from weak imports, American workers often lose their jobs as these goods are no longer produced in the United States. Ideally, the United States would be exporting (high end) goods that other countries don't produce.
