The volatility in initial claims continues: after last week's drop to 282K [14]pulled the heavily-watched number back under 300K, this week we have seen even less layoffs, with the DOL reporting that only 268K claims for unemployment benefits were filed in the past week, well below the 286K expected. The 4-week moving average was 285,500, a decrease of 14,750 from the previous week's revised average. The previous week's average was revised up by 3,250 from 297,000 to 300,250.
It is not surprising that the state with the biggest jump in initial claims was in Texas which accordinng to the DOL was the only state that had a 2K+ increase in claims: to be expected for the state most exposed to the Oil recession.
[15]
And while it is no secret that US labor data leave much to be desired it was today's trade data that will shock many, after the BEA reported that in February, the US trade deficit collapsed to just $35.4 billion, a 17% plunge compared to the $42.7 billion January revision, and far below the $41.2 billion expected. The $7.3 billion drop in the deficit was the largest since the $8.3 billion drop posted in June of 2013. And even more notable: the total February deficit was the lowest since October 2009!
How did this happen? The answer: coordinated contraction but while exports dropped by $3 billion in February to $186.2 billion, it was the collapse in imports, which plunnged by $10.2 billion, or 4.4%, to $221.7 billion, that was a flashing red light, and suggests that either the California port strike truly did a number on the US economy, or that the US economy has slowed down far more sharply than anyone had expected.
The breakdown:
- Trade deficit fell 16.9% in Feb.
- Trade deficit excluding petroleum at $27.37b in Feb.
- Imports fell 4.4% in Feb. to $221.69b from $231.92b in Jan.
- Exports fell 1.6% in Feb. to $186.25b from $189.24b in Jan.
A look at just US oil imports:
- Feb. non-crude petroleum imports narrowed to $3.8b from $4.5b m/m; 28.3% of total petroleum imports
- Crude oil imports averaged 6.859m b/d in Feb. compared to 7.186m b/d in Jan.
- Oil imports from OPEC fell to 34.7% of the total
- Oil imported from Canada and Mexico was 55.9% of total in Feb. vs 53.0% in Jan.
- Petroleum deficit in real dollars at $9.92b in Feb.
- Petroleum exports fell in real dollars to $7,456b in Feb. after $8,536b in Jan.
The full details from the BEA [16]:
The U.S. monthly international trade deficit decreased in February 2015 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit decreased from $42.7 billion in January (revised) to $35.4 billion in February, as imports decreased more than exports. The previously published January deficit was $41.8 billion. The goods deficit decreased $7.4 billion from January to $55.2 billion in February. The services surplus decreased $0.1 billion from January to $19.7 billion in February.
Exports
Exports of goods and services decreased $3.0 billion, or 1.6 percent, in February to $186.2 billion. Exports of goods decreased $2.9 billion and exports of services decreased $0.1 billion.
- The decrease in exports of goods reflected decreases in capital goods ($1.7 billion), in industrial supplies and materials ($1.4 billion), and in automotive vehicles, parts, and engines ($1.1 billion) that were partly offset by an increase in consumer goods ($1.3 billion) was partly offsetting.
- The decrease in exports of services reflected decreases in transport ($0.2 billion), which includes freight and port services and passenger fares, and in financial services ($0.1 billion) that were partly offset by increases in other business services ($0.1 billion) and in travel (for all purposes including education) ($0.1 billion).
Imports
Imports of goods and services decreased $10.2 billion, or 4.4 percent, in February to $221.7 billion. Imports of goods decreased $10.3 billion while imports of services increased less than $0.1 billion.
- The decrease in imports of goods mostly reflected decreases in industrial supplies and materials ($4.4 billion), in capital goods ($2.6 billion), and in automotive vehicles, parts, and engines ($1.7 billion).
- The increase in imports of services reflected an increase in travel (for all purposes including education) ($0.1 billion) that was mostly offset by a decrease in transport ($0.1 billion).
Goods by geographic area (seasonally adjusted, Census basis)
- The goods deficit with Japan decreased from $6.5 billion in January to $4.3 billion in February. Exports increased $0.1 billion to $5.4 billion and imports decreased $2.1 billion to $9.7 billion.
- The goods deficit with China decreased from $29.3 billion in January to $27.3 billion in February. Exports decreased $1.5 billion to $9.0 billion and imports decreased $3.5 billion to $36.3 billion.
- The balance with OPEC countries shifted from a deficit of $1.2 billion in January to a surplus of $0.3 billion in February. Exports increased $0.3 billion to $6.4 billion and imports decreased $1.3 billion to $6.0 billion
So is a soaring US dollar good for the economy and for the US trade balance? No. But what the data above reveal is that while US exports slowed, imports slowed even more as the global contraction spills over to all American trade partners.
