December 2015 Trade Data Continues To Show Weakness

A quick recap to the trade data released today continues to paint a relatively dismal picture of global trade. The unadjusted three month rolling average value of exports and imports decelerated. Many care about the trade balance which degraded.

Import goods growth has positive implications historically to the economy – and the seasonally adjusted goods and services imports were reported up month-over-month. Econintersect analysis shows unadjusted goods (not including services) growth deceleration of 3.8 % month-over-month (unadjusted data) – down 7.8 % year-over-year (up 0.4% year-over-year inflation adjusted). The rate of growth 3 month trend is decelerating but in expansion.

Exports of goods were reported down, and Econintersect analysis shows unadjusted goods exports growth acceleration of (not including services) 0.4 % month-over month – down 10.4 % year-over-year (down 3.8% year-over-year inflation adjusted). The rate of growth 3 month trend is decelerating and in contraction.

Inflation Adjusted But Not Seasonally Adjusted Year-over-Year 3 Month Rolling Average – Goods Export (blue line) and Goods Import Excluding Oil (red line)

z trade2.PNG

The decline in seasonally adjusted (but not inflation adjusted) exports was almost across all export categories. Import increase was also broad based. Pretty much all the movement was insignificant.

The market expected (from Bloomberg) a trade deficit of $-44.2 B to $-41.0 B billion (consensus $-43.0 billion deficit) and the seasonally adjusted headline deficit from US Census came in at a deficit of $43.4 billion.

It should be noted that oil imports were up 43 million barrels from last month, and up 8 million barrels from one year ago.

The data in this series is noisy, and it is better to use the rolling averages to make sense of the data trends.

The headline data is seasonally but not inflation adjusted. Econintersect analysis is based on the unadjusted data, removes services (as little historical information exists to correlate the data to economic activity), and inflation adjusts. Further, there is some question whether this services portion of export/import data is valid in real time because of data gathering concerns. Backing out services from import and exports shows graphically as follows: