October 2020 Trade Data Continues To Show Modest Recovery

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

Analyst Opinion of Trade Data

From the BEA:

Exports and imports in September reflect both the ongoing impact of the COVID-19 pandemic and the continued recovery from the sharp declines earlier this year. The full economic effects of the pandemic cannot be quantified in the trade statistics because the impacts are generally embedded in source data and cannot be separately identified. The Census Bureau and the Bureau of Economic Analysis continue to monitor data quality and have determined estimates in this release meet publication standards.

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 improved for imports and exports - but remains 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 up month-over-month - import goods growth has positive implications historically to the economy. Econintersect analysis shows unadjusted goods (not including services) growth accelerated 0.2 % month-over-month (unadjusted data) - up 0.0 % year-over-year (up 1.1 % year-over-year inflation-adjusted). The rate of growth 3-month trend improved.
  • Headlines said Exports of goods were up month-over-month, and Econintersect analysis shows unadjusted goods export growth accelerated (not including services) 2.5 % month-over-month - down 7.0 % year-over-year (down 5.4 % year-over-year inflation-adjusted). The 3-month rate of growth trend improved.

  • The market expected (from Econoday) a trade balance of $-67.1 B to $-63.5 B (consensus $64.8 B billion deficit) and the seasonally adjusted headline deficit from US Census came in at $63.1 billion.
  • It should be noted that oil imports were up 5 million barrels from last month, and down 25 million barrels from one year ago.
  • The data in this series is noisy, and it is better to use the rolling averages to make sense of the data trends.
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