US Trade Deficit Tumbles As Overall Imports Plunge, Even As Oil Imports Continue To Rise

In a surprising development, the U.S. monthly international trade deficit decreased substantially in March 2016 from $47.0 billion in February (revised) to $40.4 billion in March, below the $41.2 billion expected, as exports declined by a modest $1.5 billion, a 0.9% drop to $176.62BN from $178.16BN in Feb. At the same time imports outright plunged by $8.1 billion, down 3.6% in March to $217.06BN from $225.13BN in Feb. Curiously this happened just as Canada announced a trade deficit of C$3.4 billion, the widest on record. In March, the US trade deficit excluding petroleum was $37.48 billion.

The previously published February US deficit was $47.1 billion. The goods deficit decreased $6.0 billion from February to $58.5 billion in March. The services surplus increased $0.5 billion from February to $18.1 billion in March.

 

The breakdown:

Exports

  • Exports of goods and services decreased $1.5 billion, or 0.9 percent, in March to $176.6 billion. Exports of goods decreased $1.8 billion and exports of services increased $0.3 billion.
  • The decrease in exports of goods mainly reflected decreases in consumer goods ($1.6 billion) and in industrial supplies and materials ($0.8 billion). An increase in capital goods ($1.0 billion) was partly offsetting.
  • The increase in exports of services mainly reflected increases in travel (for all purposes including education) ($0.2 billion) and in transport ($0.1 billion), which includes freight and port services and passenger fares.

Imports

  • Imports of goods and services decreased $8.1 billion, or 3.6 percent, in March to $217.1 billion. Imports of goods decreased $7.9 billion and imports of services decreased $0.2 billion.
  • The decrease in imports of goods mainly reflected decreases in consumer goods ($5.1 billion) and in capital goods ($1.6 billion).
  • The decrease in imports of services was more than accounted for by a decrease in transport ($0.4 billion).

Goods by geographic area (seasonally adjusted, Census basis)

  • The deficit with China decreased $6.2 billion to $26.0 billion in March. Exports increased $0.1 billion to $8.5 billion and imports decreased $6.1 billion to $34.4 billion. Which is also surprising considering China said its net surplus with the US jumped.
  • The balance with the United Kingdom shifted from a deficit of $0.5 billion in February to a surplus of $0.5 billion in March. Exports increased $0.6 billion to $4.8 billion and imports decreased $0.3 billion to $4.4 billion.
  • The surplus with Saudi Arabia decreased $1.2 billion to $0.1 billion in March. Exports decreased $0.9 billion to $1.4 billion and imports increased $0.3 billion to $1.3 billion.

Finally, looking only at just the suddenly rising US oil imports alone, March crude oil imports increased to $6.71b from $5.9b last month, representing 75.4% of total petroleum imports.

  • March non-crude petroleum imports widened to $2.2b from $2.1b m/m; 24.6% of total petroleum imports
  • Crude oil imports averaged 7.819m b/d in March compared to 7.404m b/d in Feb.
  • Oil imports from OPEC rose to 43.9% of the total
  • Oil imported from Canada and Mexico was 43.6% of total in March vs 49.6% in Feb.
  • Petroleum deficit in real dollars at $8.05b in March
  • Petroleum exports rose in real dollars to $9,193b in March after $9,033b in Feb.
  • Oil imports from Saudi Arabia rose 18.5m barrels

Keep a close eye on US oil imports because if as the pundits say US shale production is indeed declining, the US will have no choice but to revert to its old model of importing its oil needs at least until such time as shale is once again back online.