Trade data for July and for January-July 2016

August 15, 2016

Bottom line:  For the first time this year, a set of monthly trade data can be said to show signs of improvement. The absolute data for July, especially for exports, and hence the deficit, were still highly negative, but there is now clear evidence that the trend has improved over recent months The second half of 2016 may yet prove to be very different to the first half.

Specifics:

  • On a seasonally-adjusted basis and excluding diamonds, ships and aircraft, the trade deficit for July fell to $1.3bn — the second successive month of contraction in the deficit, when measured on this basis. This reflects a significant downward revision of the June deficit in the latest report.
  • The cumulative deficit for January-July 2016 was $8bn, compared to $5bn in the same period of 2015, and compared to $8.8bn for all of 2015.
  • The improvement in the data stems from a lower level of imports in July compared to June, which outweighed the decline in exports (all data on a seasonally-adjusted basis, excluding trade in diamonds, ships and aircraft).
  • Trend data for imports show that the rate of increase of consumer goods imports has now turned negative, while that for imports of investment goods has slowed considerably.
  • In both cases, the cause is the ebbing of the surge in vehicle imports, from both businesses and households. On the other hand, the rate of increase of machinery imports remains steady at 16%, compared to the year-earlier period.
  • Exports remain weak, but seasonally-adjusted data and trend data show an improvement underway, especially in the key high-technology sectors.
  • In particular, pharmaceutical exports are now rebounding strongly, although other high-tech industries remain weak.
  • The data also show that the medium-tech sectors, which have been hit hard by the slump in chemicals exports, are now showing signs of stabilizing.

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