The trade deficit in January 2011 widened to $46.3 billion from $40.3 billion. Market was expecting a trade deficit of $41 billion, so the report was worse than consensus. The full release is here.
What interests me is the trade with China. China announced their trade figures for February 2011 earlier today, and it reported a trade deficit, entirely unexpected. But I suggested that we should look beyond February as the Chinese New Year might have caused some distortion to the true picture.
On the trade between the US and China, I have also previously suggested that despite seemingly increasing exports from the US to China, there is hardly any noticeable trend that trade deficit with China is narrowing. Trade deficit, as I pointed out, exhibit a huge seasonality. US Trade Deficit with China tends to narrow approaching the end of the year until February or March next year.
Source: St. Louis Fed, US Department of Commerce: Bureau of Economic Analysis, Census Bureau
Noted: Non-seasonally adjusted. The red line is the 12-month moving average
We shall wait for few more months to see if trade deficit will narrow till February or March 2011 then widen again. At this moment, there is still hardly any sign of a trend that trade balance with China is going to narrow. And by the way, the ISM Manufacturing New Order Index would suggest that US imports from China will increase in the coming months (H/T to Joe).
Source: St. Louis Fed, US Department of Commerce: Bureau of Economic Analysis, Census Bureau, Institute for Supply Management
This article originally appeared here: United States: Trade Gap Widened And Some Thoughts On Trade Balance With China
Also sprach Analyst – World & China Economy, Global Finance, Real Estate
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