Trade data for December and for January-December 2016

January 12, 2017

Bottom line:  Looking much better. In November, I warned that “The October trade data were negative almost across the board and must trigger orange warning lights.” — well, they can be switched off now. The latest data, through year-end, show that underneath the scary headline numbers, the trends are improving in both imports (declining) and exports (beginning to recover). The December figures are swollen by the INCREDIBLE level of car imports, but this boom is unsustainable. Overall, the outlook for 2017 is for the deficit to shrink.

Specifics:

  • On a seasonally-adjusted basis and excluding diamonds, ships and aircraft, the trade deficit for December was US$1.09bn. Seven out of the other 11 months of 2016 posted a higher deficit.
  • For the whole year, the trade deficit (excluding diamonds, ships and aircraft) totaled US$13.1bn, an increase of 68% over 2015 — after three successive years of decline.
  • Total imports rose 6% and total exports fell 3% in 2016. Excluding diamonds, ships and aircraft, imports rose 10% and exports fell 3.5%.
  • The final quarter saw a big improvement in exports. Trend data show exports rising by 11% in October-December.
  • The two key sectors of high-tech, pharma and electronics, posted strong gains in December and in the fourth quarter, after significant weakness in the first half of the year.
  • Both the medium-high and the medium-low technology sectors increased their exports in 2016, mainly thanks to medical, dental and electrical equipment manufacturers — and despite continued declines in the chemicals sector
  • Imports display mixed trends: while fuel imports fell 21% in 2016, following sharp falls in 2015 and raw materials imports were steady, imports of both consumer goods (12%) and especially investment goods (35%) were strong.
  • A major factor in both sectors was the boom in vehicle imports, which has reached mania levels. In December, businesses spent over US$500mn and households almost US$600mn on new cars.
  • These are unprecedented amounts — more than twice as much as the next-highest monthly total and over three times the monthly average.

Investment in plant and equipment was also strong — led by Intel’s construction of a major new facility, with production due to start later in 2017.

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