U.S. and Canadian Trade

October 9, 2009

The U.S. goods and services trade deficit of $30.71 billion in August was similar to July’s $31.85 billion and the first-half pace of $29.24 billion per month.  The deficit was also smaller than forecast.  Exports firmed 0.2%, while imports fell 0.6% in August.

On a census basis, the U.S. merchandise trade deficit of $310.2 billion in January-August was $257.5 billion lower than a year, a drop of $32.2 billion per month.  40.6% of that reduction involved commerce with OPEC, and another third of the improvement was in trade with other countries in the Western Hemisphere.  China, which is responsible for 46.3% of the entire U.S. deficit, accounted for only 9.9% of the on-year reduction.  That was similar to the contributions of Japan (10.0%) and Europe (12.2%) toward the drop in the U.S. trade deficit.  As recently as 1H01, the U.S. deficit with Japan was about 15% larger than that with China, but in the first eight months of 2009, the deficit with China was 5.5 times greater than that with Japan.

Canada’s trade deficit in August of C$ 1.985 billion was more than twice as big as expected due to a shocking and disappointing 5.0% slump in export volumes and a 5.1% decline in nominal exports.  Non-energy Canadian exports posted a larger plunge of 6.5% from July, a huge setback and more evidence of another commodity-sensitive currency that is threatened by this year’s sharp exchange rate appreciation to uncompetitive levels.  Monthly export reductions amounted to 10.3% for agricultural goods, 10.4% for machinery and equipments, 5.5% for the automotive sector, 4.2% for all other consumer goods, 3.3% for industrial goods and materials, and 3.4% for forestry products.  Canadian imports fell 2.8% in August, slightly less than half the drop in exports.  Likewise, imports were 16.7% lower than a year earlier, half the 31.6% on-year plunge in exports.

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.

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