July 2018 International Trade
Submitted by Atlas Indicators Investment Advisors on October 1st, 2018
America’s trade imbalance worsened in July according to the Bureau of Economic Analysis. Our nation’s trade deficit reached $50.08 billion. This most recent shortfall is a 9.4 percent deterioration versus July’s shortfall of $45.74 billion. Once again, this report seems to reflect the current state of global economics: American strength and international weakness as demonstrated by growing imports and falling exports.
Americans increased their purchases of foreign-made wares. Imported goods increased $1.9 billion to $213.9 billion in July. Also, companies increased their demands for capital goods (especially computer related wares). Fuel and crude oil imports each gained as well. Automotive parts and engines revved up an additional $500 million. However, consumer goods were lower by $800 million, led by a $1.3 billion decline for pharmaceutical preparations.
Over on the other side of the ledger, exports of goods and services were $211.1 billion, or $2.1 billion less than a month earlier. American firms shipped $2.3 billion less to foreign purchasers than in June for a goods total of $140.8 billion. Overseas firms lessened their capital goods orders as civilian aircraft declined $1.6 billion; it’s worth keeping in mind that aircraft costs are large, so even a modest slowdown in the number of deliveries can have a large impact on this figure. With all the trade skirmish headlines each day, it is not surprising to see agricultural goods suffering in the period; in particular, soybean exports fell $700 million. Nonetheless, exported services increased $200 million to $70.3 billion, led by rising charges for intellectual property.
This week could be a big one for trade. We are seeing headlines suggesting more tariffs will be imposed on China. Will they counter with their own? Which American industries will be hurt/helped? Will workers in the U.S. benefit? For years, the international trade indicator was relatively boring, but the rhetoric from leaders of the two largest economies are making it headline bait again.