The U.S. February 2012 trade deficit shrank $6.5 billion to $46 billion in a month. This is a 12.37% monthly decrease in the trade deficit. January's trade deficit was revised slightly down to $52.5 billion. February's exports barely budged, only a $240 million increase, while imports dropped $6.25 billion, or 2.68%. It only takes a slight improvement on imports for the trade deficit to drop significantly. Last month's imports were a record $233.44 billion.
Don't get too excited, in spite of being seasonally adjusted the month to month trade deficit does vary, we'd have to see a quarterly or yearly change to establish any positive trend.
While we'd like to say the cause is less imports from China, this report is seasonally adjusted and the per country trade statistics are not. That said, on the seasonally adjusted front, February had unusually warm weather. Additionally China has a holiday, their lunar new year, which shuts down the nation's manufacturing and that moon calender ran over into February. Petroleum related imports, seasonally adjusted, also significantly dropped.
The China deficit alone was, -$19.364 billion, or 39.9% of the goods trade deficit for February. This includes oil, is not seasonally adjusted and is on a raw customs accounting basis. For comparison's sake the not seasonally adjusted goods trade deficit by Census accounting methods was -$48.54 billion. By country trade deficits are not seasonally adjusted and China's never ending import barrage is highly cyclical as one can see in the below graph of the deficit with China.
Oil, related imports dropped $1.8 billion with a petroleum end use trade deficit of -$27.79 billion, for February, a decrease, -6.1%, from last month. Petroleum related end use was 45.8% of the goods trade deficit.
By the more specific NAICS codes, not seasonally adjusted, oil and gas were 40% of the goods trade deficit, or -$19.42 billion. Assuming China has very little oil and gas exports to the United States, if one subtracts off oil and gas from the goods trade deficit, China becomes very roughly 66% of the non-oil and gas goods trade deficit.
The United States basically has two major ongoing problems with the trade deficit, Chinese goods and Oil imports. Below is the not seasonally adjusted import price index for oil fuel. The average price for a barrel of oil in February was $103.63. By volume, the U.S. imported 225,699,000 barrels of crude oil in February, about 45 million less barrels than January, a 16.6% monthly decline.
Below are imports vs. exports of goods and services from January 2007 to December 2011. Notice how much larger imports are than exports, but also notice the growth, or rate of change between months of U.S. exports over time. To state the obvious, imports subtract from GDP and exports add. This month's trade deficit dramatically decline can only help raise Q1 2012 GDP projections.
Below is the list of good export changes from January to February, seasonally adjusted. Exports of goods decreased $0.6 billion. Exhibit 7 gives Census accounting method breakdown for exports.
- Automotive vehicles, parts, and engines: -$0.811 billion
- Industrial supplies and materials: -$0.061 billion
- Other goods: +$0.539 billion
- Foods, feeds, and beverages: +$0.491 billion
- Capital goods: +$0.011 billion
- Consumer goods: +$0.300 billion
The saving grace for U.S. exports this month was services which increased $0.8 billion. From the report:
The increase was mostly accounted for by increases in travel, other private services (which includes items such as business, professional, and technical services, insurance services, and financial services), and royalties and license fees.
Here are the goods import monthly changes, seasonally adjusted. Here again we see oil imports' dramatic drop, -$894 million in crude oil and -$782 million in fuel oil. Within capital goods, industrial machinery imports dropped -$438 million. Fish and shell fish imports -$174 million. Where China would be showing up is in the massive drop in consumer goods. There was a -$1.031 billion drop in apparel imports and not just China makes clothing, a -$538 million drop in toys, sporting goods, -$387 million monthly decline in furniture and a -$307 million drop in footwear.
- Industrial supplies and materials: -$1.526 billion
- Capital goods: -$0.433 billion
- Foods, feeds, and beverages: -$0.600 billion
- Automotive vehicles, parts, and engines: -$1.049 billion
- Consumer goods: -$2.715 billion
- Other goods: +$0.093 billion
Running a trade deficit in advanced technology is not a good sign for those jobs of tomorrow. The below report statistics are not seasonally adjusted.
Advanced technology products exports were $23.3 billion in February and imports were $29.2 billion, resulting in a deficit of $5.8 billion. February exports were $0.9 billion more than the $22.5 billion in January, while February imports were virtually unchanged from January.
Here is the breakdown with major trading partners, not seasonally adjusted. China is the worst trade deficit, as detailed above.
OPEC can be assumed to be oil and the OPEC nations are: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, Venezuela.
The February figures show surpluses, in billions of dollars, with Hong Kong $3.1 ($2.1 for January), Australia $1.7 ($1.6), Singapore $0.7 ($0.8), and Egypt $0.2 ($0.2).
Deficits were recorded, in billions of dollars, with China $19.4 ($26.0), Japan $7.0 ($6.2), OPEC $6.4 ($10.0), European Union $5.9 ($8.5), Mexico $5.8 ($4.2), Germany $3.6 ($4.1), Canada $2.8 ($4.9), Ireland $2.2 ($2.3), Venezuela $1.9 ($2.0), Nigeria $0.9 ($1.3), Taiwan $0.8 ($1.3), and Korea $0.4 ($1.4).
Here is the BEA website for additional U.S. trade data.
You might ask what are these Census Basis versus Balance of Payment mentioned all over the place? The above mentions various accounting methods so we're comparing Apples to Apples and not mixing the fruit. The trade report in particular is difficult due to the mixing of these two accounting methods and additionally some data is seasonally adjusted and others are not. One cannot compare values from different accounting methods and have that comparison be valid.
In a nutshell, the Balance of Payments accounting method is where they make a bunch of adjustments to not count imports and exports twice, the military moving stuff around or miss some additions such as freight charges. The Census basis is more plain raw data the U.S. customs people hand over which is just the stuff crosses the border. The 2005 chain weighted stuff means it was overall modified for a price increase/decrease adjustment in order to remove inflation and deflation time variance stuff.
Bottom line, you want just the raw data of what's coming into the country and going out, it's the Census basis and additionally the details are only reported in that accounting format. Additionally the per country data is not seasonally adjusted so watch out trying to add those numbers into the overall trade deficit. It's a statistical no-no to mix seasonal and non-seasonally adjusted numbers.
The Census is also getting into the graphing game with some nice pie charts breaking down exports by country, as well as a chart showing petroleum as an overall percentage of the trade deficit.