The foreign trade division of the Census Bureau released the December trade figures this morning. Defying analyst expectations for a small decline in the trade deficit, it soared by over 10% from $36.4 billion in November to $40.2 billion in December. A $4.6 billion rise in exports was swamped by an $8.4 billion rise in imports. The goods deficit rose by $3.4 billion while the services surplus shrank by $0.4 billion.
Petroleum products accounted for all of the increase in the goods deficit and then some, with the petroleum deficit rising by $3.6 billion. The trade deficit in the following categories of goods also worsened by the amount indicated:
- Food, feed and beverages: -$0.5 billion
- Vehicles & parts: -$0.7 billion
The trade deficit in the following categories of goods improved by the amount indicated:
- Industrial supplies, except petroleum: +$0.9 billion
- Consumer goods: +$0.3 billion
- Capital goods (industrial machinery & equipment): +$0.2 billion
- Other goods: +$0.03 billion
So, aside from petroleum products, the overall balance of trade in goods improved by $0.2 billion.
The following is a chart of the trade data:
The following is a chart of the trade data as a percentage of real per capita GDP:
As you can see, although the overall trade deficit is getting worse, thanks largely to oil, the trade deficit in non-petroleum goods actually improved slightly in December, with a rise in exports slightly out-pacing a rise in imports. This is a glimmer of good news, but it’s too early to read much into it.
The trade deficit with the following selected nations worsened by the indicated amount:
- Canada: -$1.5 billion
- Venezuela: -$0.5 billion
- Ireland: -$0.5 billion
- Nigeria: -$0.1 billion
- Mexico: -$0.1 billion
The worsening in the deficit in all of the above except Ireland can be attributed to oil.
The trade deficit with the following selected nations improved as indicated:
- China: +$2.1 billion
- Japan: +$0.8 billion
- Saudi Arabia: +$0.5 billion
- Germany: +$0.3 billion
- South Korea: +$0.1 billion
This is very good news because, with the exception of Saudi Arabia, the above countries have accounted for the worst of our trade deficit in non-petroleum goods. Is it possible that the rest of the world is actually making an effort at cutting their reliance on exports to the U.S.? I’m skeptical. One month does not a trend make. But it’s a step in the right direction. Time will tell.