Econoday Report: International Trade 13, 2005

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2005 U.S. Economic Events & Analysis

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International Trade

Definition
The international trade balance measures the difference between imports and exports of both tangible goods and services. Imports may act as a drag on domestic growth and they may also increase competitive pressures on domestic producers. Exports boost domestic production. Why Investors Care

Released on 10/13/05 For Aug 2005

Trade Balance Level
Actual	$-59.0B
Consensus	$-59.6B
Consensus Range	$-58.0B to $-61.0B

Highlights
The nation's trade gap totaled a slightly less-than-expected $59.0 billion in August. There was no Katrina effect on the data.

The Commerce Department said it will detail advance September trade data on the Gulf region in a special report to be released Oct. 21.

Imports rose 1.8% in the month to $167.2 billion boosted by a record $22.6 billion of petroleum imports in a category that is certain to see further swelling in September. The average price per barrel rose 7.4% in the month (note severe fuel pressures were reported this morning in the import/export price report for September).

Exports rose 1.7% to $108.2 billion showing a big gain for chemicals, reflecting higher prices. Note that chemical export prices showed a sharp increase in September (also data from the import/export price report).

The trade gap with China, swollen by winter seasonal textiles, rose to $18.5 billion from $17.7 billion. The gap with OPEC rose only slightly to $9 billion, as did the gap with the EU at $11.3 billion. The gap with Japan was unchanged at $6.6 billion.

Though September is still a wildcard, the nation's trade gap is a bit lower in July and August compared to the second quarter, indicating that trade could add to third quarter growth. The dollar appeared to firm in initial reaction to the data, but which, pending September's data, are not likely to have much impact on the markets or the economic outlook.

Market Consensus Before Announcement
The international trade deficit on goods and services narrowed in July to $57.9 billion after widening in June. Exports inched up 0.4 percent in July, but imports decreased 0.7 percent during the month. The August figures, of course, primarily reflect activity pre-Katrina - although New Orleans port activity was clearly impacted at the end of August. The Port of New Orleans is among the busiest top five in the U.S.

International trade balance Consensus Forecast for Aug 05: $-59.6 billion
Range: $-58 to $-61.0 billion

Trends

Exports grow when foreign economies are strong. The weaker the foreign exchange value of the dollar, the less expensive goods and services are to foreigners, and this also helps spurt export activity. Imports grow when U.S. economic growth is robust. Imports are also spurred by a strong foreign exchange value of the dollar.

The international trade balance has posted a deficit almost continuously since the 1980s. Any trade deficit is a drag on U.S. GDP growth, but a smaller deficit adds to growth, while a larger deficit decreases GDP growth.

Data Source: Haver Analytics

2005 Release Schedule

Released On: 1/12 2/10 3/11 4/12 5/11 6/10 7/13 8/12 9/13 10/13 11/10 12/14

Released For: Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

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