November 2018 International Trade
Submitted by Atlas Indicators Investment Advisors on February 8th, 2019November 2018 International Trade
Our friends at the Bureau of Economic Analysis are back to work, and they started by releasing the November 2018 report on International Trade in Goods and Services, known colloquially as the trade deficit report. This latest iteration shows the trade deficit improved in the penultimate month of last year. America’s shortfall was $49.3 billion after reaching $55.7 billion in October.
From the headline vantage point, this seems like an encouraging development, but the details suggest otherwise. In short, the headline figure improved because exports slowed less than imports, but they both slowed, indicating weakening global trade. Exports from America fell $1.3 billion to $209.9 billion, while imports dropped $7.7 billion to $259.2 billion. Year-to-date, our nation’s trade deficit is up 10.4 percent, an increase of $51.9 billion.
Headlines have been focused on trade with China as President Donald Trump and his administration try to reach a trade agreement with the world’s second largest economy, so we’ll look at a few specifics. America exported 5.1 percent less than in October and 32.1 percent less than a year ago to China. Meanwhile, our imports of their goods and services declined 10.9 percent in November but are only 3.3 percent less than a year ago, so the changes in trade have been asymmetric so far.
As you can see from the Bureau of Economic Analysis’ chart above, November’s trade deficit improvement runs counter to the trend which has been growing. Unfortunately, it seems to have required slowing global trade to generate the improvement which is not an optimistic development. For now, this is one data point, but this indicator should be watched closely during the next two iterations in order to see how the global economy is faring.