May 2020 Trade Again Significantly Declined Due To Coronavirus

Trade data headlines show the trade balance worsened with both imports and exports declining.

Analyst Opinion of Trade Data

This was a full month of coronavirus impact - and it significantly impacted trade. From the BEA:

The declines in exports and imports that continued in May were, in part, due to the impact of COVID-19, as many businesses were operating at limited capacity or ceased operations completely, and the movement of travelers across borders was restricted. The full economic effects of the COVID-19 pandemic cannot be quantified in the trade statistics for May because the impacts are generally embedded in source data and cannot be separately identified. The Census Bureau and the Bureau of Economic Analysis have monitored data quality and determined estimates in this release meet publication standards. For more information on the impact of COVID-19 on the statistics, see the frequently asked questions on goods from the Census Bureau and on services from BEA.

The data in this series wobbles and the 3-month rolling averages are the best way to look at this series. The 3-month average rate of growth declined for imports and exports - and is now deeper in contraction.

Econintersect uses the import trade data as a factor in determining the acceleration or deceleration of the economy - but does not believe the negative trade balance per se is an economic issue.

Note that the headline numbers are not inflation-adjusted. Taking a step back and looking at inflation-adjusted data, it is in contraction for both exports and imports.

  • Headlines said Imports of goods were down month-over-month - import goods growth has positive implications historically to the economy. Econintersect analysis shows unadjusted goods (not including services) growth decelerated 4.8 % month-over-month (unadjusted data) - down 25.7 % year-over-year (down 19.7 % year-over-year inflation-adjusted). The rate of growth 3-month trend declined.
  • Headlines said Exports of goods were down month-over-month, and Econintersect analysis shows unadjusted goods export growth decelerated (not including services) 7.3 % month-over-month - down 36.3 % year-over-year (down 30.3 % year-over-year inflation-adjusted). The 3-month rate of growth trend declined.
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