Against expectations of a $41bn deficit, September's trade deficit was practically in line at -$40.8bn, dramatically narrower than the revised higher (less negative) August print of $48.02bn as petroleum imports plunge to lowest since May 2004. With the smallest deficit since Feb 2015, The Fed is going to need a bigger boat to have enough debt to monetize when the looming rate hike drags the economy to the point of requiring more intervention.
- The goods deficit decreased $7.3 billion from August to $60.3 billion in September.
- The services surplus decreased $0.1 billion from August to $19.5 billion in September.
However, if one excludes petroleum trade, the core US trade deficit is about as about as bad as ever. Should the shale destruction continue, and US imports of oil return, this will be what happens to overall US trade.
And while the headline trade data may show improvement, breaking down the imports and exports on a Y/Y basis show that both imports and exports are down compared to last year as the global trade slowdown shows no signs of relenting:
The breakdown by category:
- Exports of goods and services increased $3.0 billion, or 1.6 percent, in September to $187.9 billion. Exports of goods increased $2.9 billion and exports of services increased $0.1 billion.
- The increase in exports of goods mainly reflected increases in consumer goods ($1.3 billion) and in capital goods ($0.9 billion).
- The increase in exports of services mainly reflected increases in travel (for all purposes including education) ($0.1 billion) and in other business services ($0.1 billion), which includes research and development services; professional and management services; and technical, trade-related, and other services.
- Imports of goods and services decreased $4.2 billion, or 1.8 percent, in September to $228.7 billion. Imports of goods decreased $4.4 billion and imports of services increased $0.1 billion.
- The decrease in imports of goods mainly reflected decreases in industrial supplies and materials ($1.6 billion), in capital goods ($1.0 billion), and in automotive vehicles, parts,and engines ($0.8 billion).
- The increase in imports of services mainly reflected an increase in travel (for all purposes including education) ($0.1 billion).
And trade broken down by geographic region:
Goods by geographic area (seasonally adjusted, Census basis)
- The deficit with China decreased from $32.9 billion in August to $30.7 billion in September. Exports increased $0.4 billion to $10.2 billion and imports decreased $1.8 billion to $41.0 billion.
- The deficit with Germany decreased from $6.8 billion in August to $5.7 billion in September. Exports increased $0.3 billion to $4.2 billion and imports decreased $0.8 billion to $9.9 billion.
- The deficit with the United Kingdom increased from $0.3 billion in August to $1.2 billion in September. Exports increased $0.2 billion to $4.8 billion and imports increased $1.0 billion to $5.9 billion.