The government shutdown means the Commerce Department isn’t releasing regularly scheduled economic data, which means we don’t get the August trade balance report that was supposed to be released at 8:30 AM today.
Had the report been released, the consensus forecast among market economists was for a slight increase in the trade deficit to $US39.5 billion from July’s $US39.1 billion deficit.
Luckily, regular economic data releases put out by the private sector also track trade metrics. Ambitious economy-watchers can also look at trade data from America’s trading partners. Below are a few datapoints that give an idea of what the international trade picture looked like in August.
- Markit U.S. purchasing managers index: The new export orders sub-index of Markit’s monthly U.S. PMI report fell to 52.0 from July’s 52.5 reading, suggesting a continued expansion in export orders, but at a slower pace than in the previous month.
- ISM manufacturing index: The new export orders sub-index of ISM’s monthly report on the manufacturing sector rose to 55.5 in August from 53.5 in July, suggesting an acceleration in export growth.
- ISM non-manufacturing index: The new export orders sub-index of ISM’s monthly report on the services sector rose to 50.5 in August from 49.5 in July, suggesting that export order growth turned positive in August after a contraction in July.
Below is some commentary from the market economists:
- BBVA’s Kim Fraser: “The international trade balance has been at the helm of the global economy in recent quarters, with slow external growth putting a damper on U.S. exports. At the same time, continued hesitation among domestic businesses and uncertainty regarding future consumer demand has limited investment in the form of imported goods and services. In July, a monthly decline in exports dragged down the trade balance to -$39.1B, though this is on par with the quarterly average for 2Q13. Given the impending fiscal breakdown in the U.S. and the still-sluggish economic environment overseas, we do not expect to see much improvement in the trade gap for August. However, we expect that export growth will at least partially recover from July’s drop and import growth will decelerate, ultimately helping to narrow the trade deficit slightly for the month.”
- Wells Fargo’s John Silvia: “After smoothing out the unusually noisy data, the trade deficit appears to have been relatively flat during the three months leading up to July. However, when looking over the past two years, the deficit seems to be narrowing in nominal terms. Some of this can be attributed to rising domestic production of petroleum and related products. As a result, more oil has been sent abroad, keeping exports from falling amid global economic weakness. More importantly, rising domestic production reduces U.S. demand for foreign oil and places downward pressure on imports. Despite this new trend, the United States still imported three times more petroleum products than it exported in July, so higher oil prices in August likely boosted imports more than exports. At the same time, persistent troubles across much of Europe and weakness in several emerging markets has restrained export growth and should contribute to the trade deficit widening to $US40.6 billion.”
- UBS’s Sam Coffin: “The July trade balance was little different from the Q2 average, implying little impact from trade on Q3 GDP growth. Imports are probably being restrained by soft demand and soft import price inflation. Exports have been held back by weakness abroad, although export orders and foreign growth are beginning to suggest strengthening.”
CIBC’s Andrew Grantham: “We don’t expect much divergence in the volume of exports and imports for August, with both on modestly improving trends. That should leave relative prices as the main determinant of the trade deficit. Import prices were flat on the month, while export prices fell. The result should be a modest widening of the trade deficit to $US40.2 bn.”
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