Exports down 1.3% in June, trade imbalance up 18.8%
posted at 9:30 am on August 11, 2010 by Ed Morrissey
Yesterday, a JP Morgan analyst estimated that the late numbers from June indicated a second-quarter GDP growth rate of 1.3% rather than the 2.4% initial estimate from Commerce, but hedged by saying that the trade numbers could shift the number yet again. Commerce released its trade numbers this morning, and JP Morgan may need to stock up on red pens. US exports declined in June while imports rose, and the trade imbalance in goods and services increased 18.8% to $49.9 billion:
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total June exports of $150.5 billion and imports of $200.3 billion resulted in a goods and services deficit of $49.9 billion, up from $42.0 billion in May, revised. …
The May to June decrease in exports of goods reflected decreases in capital goods ($1.4 billion); industrial supplies and materials ($1.0 billion); and foods, feeds, and beverages ($0.3 billion). Increases occurred in automotive vehicles,parts, and engines ($0.2 billion); other goods ($0.2 billion); and consumer goods ($0.1 billion).
The May to June increase in imports of goods reflected increases in consumer goods ($3.1 billion); automotive vehicles, parts, and engines ($1.3 billion); other goods ($0.6 billion); and capital goods ($0.5 billion). A decrease occurred in industrial supplies and materials ($0.2 billion). Foods,
feeds, and beverages were virtually unchanged.
Even the good news on the increases were tempered. For instance, while our exports of automotive products slightly increased, it was countered by a much higher increase in imports in the same category. Furthermore, the services surplus declined slightly in June, a hint that America may not keep its edge on skilled services in an already-tight economy. However, some of that was due to payments for rights to World Cup advertising, a one-time hit that fed a $600 million increase in service imports.
The trade balance picture shows the US steadily falling behind over the last year, and exports falling back in the summer:
The AP manages to avoid its favorite adverb in reporting the results:
The U.S. trade deficit surged in June to the highest level in 20 months and imports of foreign consumer goods hit an all-time high. But U.S. exports faltered, representing a setback for the global hopes of American manufacturers.
American manufacturers already knew this. After all, they see their own sales sheets before Commerce does, and their “global hopes” are focused narrowly on their own efforts, as they should be. The more accurate way of stating this is that it represents a setback to the “global hopes” of the Obama administration, which has tried selling the Recovery Summer myth for the last two months.
If JP Morgan’s Michael Feroli says that the actual Q2 GDP number was 1.3% before this announcement, where does that put it after these numbers?
Update: Zero Hedge answers the question by predicting a revision to … 0.9%. The revised number will be announced on August 27th. That number will get serious media attention, if indeed that’s what we see.
Update II: Reuters declares itself “surpris[ed],” although for good reason this time:
The U.S. trade deficit widened a surprising 18.8 percent in June on a surge of consumer goods from China and other suppliers, while U.S. exports fell, a government report showed on Wednesday.
The monthly trade gap totaled $49.9 billion, the highest since October 2008. The deficit was wider than any of the 67 Wall Street forecasts collected before the report.
True, but the gap has been widening over the last few months.
Update III: Had “exports rose” in first paragraph; should have been “imports rose.” Thanks to those who sent me the heads-up.