While the recent dramatic revision in construction spending - a direct input into GDP - which as we noted earlier this week, was a huge revision in the series by the US government which admitted to "processing errors" would lead to substantial downward revisions to recent GDP prints, moments ago the US November Trade deficit printed at $42.4 billion, down from $44.6 billion in October and better than the $44.0 billion consensus expectation.
However, instead of suggesting on overall improvement, the only reason the deficit improved is because as the BEA admitted, "exports decreased less than imports", in other words, both decreased. Specifically, imports fell 1.7% in Nov. to $224.59b from $228.36b in Oct, while exports fell 0.9% in Nov. to $182.21b from $183.78b in Oct. A key driver was another decline in petroleum imports which fell $262 million to a total of $10.7 billion courtesy of the drop in oil prices.
From the report:
The U.S. monthly international trade deficit decreased in November 2015 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit decreased from $44.6 billion in October (revised) to $42.4 billion in November, as exports decreased less than imports. The previously published October deficit was $43.9 billion. The goods deficit decreased $2.3 billion from October to $61.3 billion in November. The services surplus decreased $0.1 billion from October to $18.9 billion in November.
The full breakdown, first Exports
- Exports of goods and services decreased $1.6 billion, or 0.9 percent, in November to $182.2 billion. Exports of goods decreased $1.4 billion and exports of services decreased $0.1 billion.
- The decrease in exports of goods mainly reflected decreases in other goods ($0.7 billion), in industrial supplies and materials ($0.7 billion), and in consumer goods ($0.6 billion).
- The decrease in exports of services mainly reflected decreases in transport ($0.1 billion), which includes freight and port services and passenger fares, and in government goods and services ($0.1 billion).
Then Imports
- Imports of goods and services decreased $3.8 billion, or 1.7 percent, in November to $224.6 billion. Imports of goods decreased $3.7 billion and imports of services decreased $0.1 billion.
- The decrease in imports of goods mainly reflected decreases in consumer goods ($3.0 billion) and in capital goods ($0.6 billion).
- The decrease in imports of services mainly reflected a decrease in travel (for all purposes including education) ($0.1 billion).
And the breakdown of trade by key geographic area:
- The deficit with Mexico decreased from $6.3 billion in October to $5.4 billion in November. Exports decreased $0.9 billion to $18.8 billion and imports decreased $1.8 billion to $24.2 billion.
- The surplus with members of OPEC increased from $0.4 billion in October to $1.1 billion in November. Exports increased $1.3 billion to $6.5 billion and imports increased $0.6 billion to $5.4 billion.
- The deficit with Canada increased from $0.4 billion in October to $0.9 billion in November. Exports decreased $0.1 billion to $22.7 billion and imports increased $0.4 billion to $23.5 billion.
In short: global trade continues to slow, but because the price of imports is tumbling, and because exports are slowing less than imports, this is an improvement and may boost Q4 GDP marginally from already sub-stall speed levels.