US Trade Deficit Unexpectedly Narrows in June

Dow Jones Newswires | August 14, 2003

[Starwind]

DATA SNAP: US Trade Deficit Unexpectedly Narrows in June

.
======================================================!
International Trade                    !Surprise: Yes !
.                    June    May       !Trend: Deficit!
.  Deficit:        $39.55B   $41.48B   ! Narrows      !
.  Exports:        $84.62B   $82.68B   !Consensus:    !
.  Imports:        $124.17B  $124.16B  !$41.80 Bln    !
======================================================!

By Jeff Bater
Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)--The U.S. trade deficit narrowed in June as exports climbed to their highest level in two years while imports remained flat.

The U.S. deficit in international trade of goods and services narrowed to $39.55 billion from a revised $41.48 billion in May, the Commerce Department said Thursday.

Analysts had expected the deficit would hold essentially unchanged in June. A Dow Jones Newswires-CNBC panel of 19 economists predicted the deficit would be $41.80 billion.

The deficit in May was revised down from a previously reported $41.84 billion.

The June report showed imports were flat. U.S. purchases of foreign-made capital goods fell $79 million. Imports of foreign automobiles and parts increased $438 million to a record $18.2 billion. But Americans bought $1.21 billion less foreign consumer goods such as apparel and diamonds.

The nation's energy bill climbed to $10.56 billion in June from $10.17 billion in the prior month. There was a $1.39 increase in the average price of a barrel of oil to $25.50 in June. The U.S. imported a total $7.96 billion of crude oil during the month, up from $7.73 billion in May. The quantity of foreign crude purchased was 311.9 million barrels.

U.S. exports rose by 2.4% to $84.6 billion - the highest level of overseas sales since $85.2 billion in June 2001. Americans sold abroad $818 million more capital goods like aircraft and computer accessories. The U.S. exported $208 million less automobiles and parts, but $482 million more consumer goods such as artwork and toys and games. Foreign sales of industrial supplies were up $187 million. Foods, feeds and beverages rose $166 million.

Deficits with major trading partners were mixed in June. The deficit with Canada narrowed to $3.79 billion from a $3.85 billion in May. The deficit with Mexico was $3.423 billion, after $3.422 billion in the previous month.

The trade deficit with Western Europe fell, narrowing to $7.96 billion in June from $8.26 billion in May. The deficit with Japan grew to $5.38 billion, compared to a $4.49 billion deficit in May.

The largest bilateral trade gap, the one with China, widened to $9.990 billion from May's $9.86 billion.

-By Jeff Bater; Dow Jones Newswires; 202 862 6616; jeff.bater@dowjones.com

-Campion Walsh contributed to this report.

(END) Dow Jones Newswires

08-14-03 0830ET- - 08 30 AM EDT 08-14-03

[Starwind]

The full Commerce Dept report is at U.S. International Trade in Goods and Services - June 2003

[Starwind]

Table of U.S. Goods, Services Trade Balance Data

.
.                                            Year To Date
.                         JUNE      MAY      2003     2002

DEFICIT                  39.55     41.48    244.27   194.94
  PREVIOUS REPORT                  41.84
TOTAL IMPORTS           124.17    124.16    740.84   675.08
  PERCENT CHANGE          0.0       1.0       9.7     -5.1
TOTAL EXPORTS            84.62     82.68    496.57   480.14
  PERCENT CHANGE          2.4       1.7       3.4     -9.1
MERCHANDISE TRADE        43.62     45.42    266.90   220.05
  DEFICIT % CHANGE       -3.9       0.8      21.3      4.2

(DOLLAR FIGURES IN BILLIONS, PERCENT CHANGES IN MONTHLY
COLUMNS ARE FROM PREVIOUS MONTH.  PERCENT CHANGES IN YEAR-
TO-DATE COLUMNS ARE FROM PREVIOUS YEAR.)

 

  (MORE) Dow Jones Newswires

  08-14-03 0830ET- - 08 30 AM EDT 08-14-03

[Starwind]

Table of U.S. Trade Data -2: Imports, Exports

.
.                                            YEAR TO DATE
.                         JUNE      MAY      2003     2002

SERVICE IMPORTS          20.16     19.74    119.46   111.04
 TRAVEL                   4.56      4.31     27.27    28.71
 PASSENGER FARES          1.78      1.65      9.96     9.75
 OTHER TRANSPORTATION     3.68      3.60     21.77    18.47
 ROYALTIES, LICENSE FEES  1.68      1.67      9.94     9.63
 OTHER PRIVATE SERVICES   6.33      6.31     37.45    33.96
 DIRECT DEFENSE EXPEND    1.89      1.96     11.60     9.06
 OTHER U.S. GOVERNMENT    0.24      0.24      1.47     1.47

GOODS IMPORTS (CENSUS)  103.55    104.07    619.65   562.39
 FOOD, FEED, BEVERAGE     4.47      4.61     27.33    24.11
 INDUSTRIAL (INCL OIL)   25.87     25.61    157.01   125.33
 CAPITAL (EXC AUTOS)     24.39     24.47    143.85   140.52
 AUTOS, PARTS            18.23     17.79    104.04    99.15
 CONSUMER(EXC AUTO,FOOD) 26.50     27.71    163.73   148.60
 OTHER                    4.10      3.87     23.69    24.68

SERVICE EXPORTS          25.58     24.92    149.19   143.42
 TRAVEL                   5.50      5.10     31.62    32.33
 PASSENGER FARES          1.41      1.27      7.50     8.50
 OTHER TRANSPORTATION     2.64      2.59     15.59    14.18
 ROYALTIES, LICENSE FEES  3.94      3.92     23.37    21.60
 OTHER PRIVATE SERVICES  10.93     10.88     64.37    60.89
 MILITARY SALE CONTRACTS  1.10      1.09      6.34     5.54
 OTHER U.S. GOVERNMENT    0.07      0.07      0.40     0.39

GOODS EXPORTS (CENSUS)   59.93     58.65    352.75   342.34
 FOOD, FEED, BEVERAGE     4.41      4.25     26.00    24.58
 INDUSTRIAL (INCL OIL)   14.47     14.28     85.50    76.55
 CAPITAL (EXC AUTOS)     24.13     23.31    141.23   144.47
 AUTOS, PARTS             6.55      6.76     39.90    38.97
 CONSUMER(EXC AUTO,FOOD)  7.66      7.18     43.63    41.72
 OTHER                    2.71      2.88     16.50    16.06

(DOLLAR FIGURES IN BILLIONS, SEASONALLY ADJUSTED)

 

  (MORE) Dow Jones Newswires

  08-14-03 0830ET- - 08 30 AM EDT 08-14-03

[Starwind]

Fyi...(reuters didn't provide their usual report this release)

[q_an_a]

Take a couple of moments to think about how oil represents 20%. Build a couple of nuclear plants in every region of the country and put 2 million hybrid cars on the road and this number is 2%.

For all the china bashing they make 2 billion more than the Japanese; that is not much when you consider how many products are shipped from china. I expect that like all the early made in japan talk this will pass as we make more custom products in america and the mass production in the 52nd state of china.

[expat_panama]

reuters didn't provide their usual report this release

and why am I not surprised?

[Starwind]

and why am I not surprised?

Reuters has several articles out ths AM saying pretty much the same as DJ above.

But the Commerce Dept may have reformatted their new release and consequently the tabular summary report that Reuters typically provides (much more readable than DJ's) hasn't been availabile. I suspect it'll be out later this AM.

Contrary to popular belief on this forum, Reuters finacial reporting is on par with most of the media - they in fact under report the economic problems and negative aspects in the econ data.

[OldFriend]

This is intended as a serious question not sarcasm.

Are you saying that Reuter's financial reporting is without negative editorial comment? They simply state the information?

If true, they would be an excellent source of financial information.

[Starwind]

Are you saying that Reuter's financial reporting is without negative editorial comment? They simply state the information?

The tabular reports, yes. They simply copy and reformat the summary portions of the government econ data reports. Likewise with the end of day reports on interest rates, swaps, MBS sales, etc. It is largey a recap of the days trading activity.

That said, they do provide articles with views by 'analysts' and 'economists' and some commentary by their own reporter. These articles are generally lacking in-depth analysis and a balanced presentation of all aspects in a given situation - much like the sound bytes you get on CNBC.

The reporters generally don't have the depth to analyse it themselves, they don't want to contradict their news sources (analysts economists - most of whom have a vested interest in spinning the news favorably), and I think the news organizations prefer the middle ground of offending the fewest possible while maintaining the appearance of being factual.

They don't fabricate good news or bad, but they follow the lead of their quoted analysts and economists and generally spin the news favorably.

[OldFriend]

Thank you. That is good to know.

[Tauzero]

Not uncorrelated with the bond yield rise.

[Starwind]

Actually the full Commerce Dept report (.pdf) is at U.S. International Trade in Goods and Services - June 2003

The earlier was just a news release.

[Starwind]

Not uncorrelated with the bond yield rise.

What mechanism are you suggesting related the falling bond prices (rising yields) with falling trade deficit? The buyers of bonds and the buyers of trade goods are two different groups. Are you suggesting consumers reacted to rising interest rates by reducing their purchases of imported goods? (which wasn't true for foreign cars last month IIRC)

[Tauzero]

We pay dollars for imports. Those dollars are either spent here, to buy treasuries or goods, or are used to buy foreign currencies, for consumption or investment elsewhere. American goods and currencies have been winning out.

[John O]

Lets see, for June:
Trade deficit down. That's good.
Unemployment claims down. That's good
Productivity up. That's good
Durable goods orders up. That's good
GDP up by greater percent than expected. That's Good
Retail sales up. That's good
(more positive indicators that I don't remember. Also good)

I bet Tom Daschle is deeply saddened

[Mo1]

I bet Tom Daschle is deeply saddened

The libs will just say that the numbers aren't good enough and could be better

[oceanview]

when the full employment report comes out, look for the figure regarding number of jobs lost/gained (44,000 lost last month). That's the only figure that matters, because jobs and job security are what people vote on. No one goes into the voting booth feeling good that retail sales were up 1.1%.

[Starwind]

American goods and currencies have been winning out.

Our currency has generally fallen somewhat which makes our exports somewhat more attractive (if denominated in a rising foreign currency).

But I don't see the connection to falling bond prices.

We pay dollars for imports. June imports decreased slightly. Whether the dollars charged to us for our fewer imports is offset by an increased exchange rate benefitting foreigners isn't clear to me. The dollar trade deficit slightly decreased because exports also increased, but ostensibly because the lower dollar makes them slightly more attractive.

Are you suggesting that those import-driven foreign dollars (I would assume fewer) instead of buying fewer bonds (albeit at higher yields) were spent on fewer US exports (even though they slightly increased - ostensibly due to a weaker dollar), and/or foreign currencies?

While that could happen, I don't see how the correlation you suggest could be shown (i.e. what lead you to the connection to falling bond prices?)

[John O]

While I agree that the jobs situation needs to improve, there is still lots of time before the election. Since jobs are a lagging indicator and the rest of the indicators are looking real good jobs should be much better as we near the election.

That said, President Bush needs to keep attentive to the jobs situation. We need the H1B and L1 visa programs basically scrapped and more tax cuts. (hope I got the visa numbers right)

[Tauzero]

"Whether the dollars charged to us for our fewer imports is offset by an increased exchange rate benefitting foreigners isn't clear to me."

Imports were only down slightly. Exports increased.

We pay foreigners in dollars for our imports. Those dollars can be used to buy American things other than treasuries, treasuries, or foreign currency for use elsewhere. The first has been happening (higher exports), the third has been happening (weaker dollar), and those two things mean that a component of demand for treasuries is necessarily reduced (implied by conservation of the dollars paid for imports.) It's not the only component of treasury demand, but a fairly large one.