Commercial Trade Flows in November

January 12, 2010

Monday brought news that Chinese exports in November were 17.7% larger than in November 2008 level, including advances of 15.9% in sales to the United States and 10.2% to the EU.  There had not been an on-year increase in total exports since September 2008.  Imports shot up 55.9% in the latest statement year.  China’s economy is recovering with a vengeance, but desired structural changes like more contained bank lending and a rotation of the source of expansion from exports to personal consumption are not developing.

Japan, Britain, the United States and Canada released their November trade statistics today.  Here are some highlights from those reports.

Japan:  A seasonally adjusted 9.0% jump in imports dwarfed a solid 4.0% rise in imports.  As elsewhere, two-way Japanese trade commerce is recovering from an extraordinarily depressed base.  Merchandise imports were still 18.2% lower than a year earlier and 29.5% beneath their November 2007 level.  Exports showed a greatly reduced on-year drop of 7.0% but were down 31.6% from two years earlier.  The current account surplus surpassed JPY 1.0 trillion for a seventh straight month and was 76.8% wider than in November 2008.  Japan remains critically reliant on net foreign demand for economic growth.  Thus far, net exports have not crumbled in the face of a pricey yen.

Britain:  British trade flows paused in November after climbing briskly in prior months.  Export volumes were unchanged in the latest month but up 5.0% in September-November from the previous three months.  Inflation-adjusted imports fell 0.8% on month but were 6.3% higher in September-November than in June-August.  The goods trade deficit narrowed 3.3% to Gbp 6.784 billion, and the deficit with countries not in the EUR hit a 48-month high and was 44.3% smaller than that in August 2008.  The goods and services deficit slid below Gbp 3 billion to print at Gbp 2.912 billion in the last month.  Officials had hoped to reap more stimulus from the weaker pound, which in trade-weighted terms has shed 15% since late July 2008.

United States: The goods and services trade deficit of $36.4 billion was 33.3% greater than its average monthly total in February-June 2009, but such remained 58.5% below the monthly average level in 2007, the year when the financial crisis began.  The census basis merchandise trade gap over the first eleven months of 2009 was 40.7% less than a year earlier.  A smaller deficit with OPEC accounted for three-eighths of the total improvement, followed by commerce with other countries in the Western Hemisphere that were responsible for 32.5% of the total deficit’s decline.  China and Europe, by comparison, generated about an eighth of the improvement apiece.  U.S. imports of goods jumped 19.2% between April and November, and the merchandise trade shortfall represented an 11-month high in the latest reported month. If the trade deficit continues to widen but the Fed fails to signal a possible rate increase later this year, selling pressure on the dollar may become steadier.

Canada: The trade balance reverted to deficit (C$ 344 million) from a C$ 503 billion surplus in October, but the smoothed trend is improving.  There was an average surplus of C$ 80 million per month in October-November following deficits of C$ 492 million per month in 2Q09 and C$ 1.233 billion per month in 3Q09.  The setback in November saw total non-energy exports drop 0.4% including declines of 1.3% in automotive products and 0.3% in machinery and equipment.  Despite a 6.2% increase in energy shipments, total exports grew just 1.1% compared to a 3.9% increase in total imports.  However, between August and November, exports still advanced 7.4%, eclipsing a 1.9% rise in imports.  In real inflation-adjusted terms, export growth over the latest three reported months increased 3.4 times faster than imports.  As a commodity producer and huge exporter to the United States, the outlook for the Canadian trade position seems upbeat, and November most likely was only a temporary interruption of an improving trend.  The Canadian dollar has appreciated 4.5% against its U.S. counterpart since the U.S. Labor Day weekend but remains 12.7% weaker than its peak on November 7, 2007 of 0.9161 per USD.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.

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