Trade data for October and for January-October 2016

November 30, 2016

Bottom line:  NOT GOOD!! The October trade data were negative almost across the board and must trigger orange warning lights. The indications in the September data that the improvement of the previous several months was fading have now been confirmed in spades. It’s possible that the extent of the weakness in exports in October was exaggerated (see below), but we await the November data with trepidation…

Specifics:

  • On a seasonally-adjusted basis and excluding diamonds, ships and aircraft, the trade deficit for October — at US$1.56bn. — was the highest this year and exports were by far the lowest this year.
  • The cumulative deficit for January-October (excluding diamonds, ships and aircraft) was up by 60% over the same period of 2015 — $12.2bn vs $7.6bn.
  • This increased deficit stems from both a decline in exports (excluding diamonds, ships and aircraft) of 5.8% and an increase in imports of 5.3%, both for in Jan-Oct 2016 versus Jan-Oct. 2015.
  • Almost every category and sector of exports fell sharply in October. This may be due to unusual seasonal factors: the entire Jewish holiday period fell in October this year and many workdays were lost. The ‘seasonal adjustment’ calculation may not have fully compensated for the impact of this seasonality. If so, we should see a rebound in November.
  • However, the renewed weakness of exports began in September and is again being led by the high-tech sectors, although pharma exports have stabilized over the year (but plunged in October).
  • Imports are now trending downwards overall, but their rate of decline in recent months has been much slower than that of exports.
  • Vehicle imports have changed direction again, at least in the household sector, where the volume of car purchases has jumped in September and October, regaining the record levels of earlier in the year.
  • Vehicle imports by businesses are still falling, while imports of plant and equipment are still rising, although less strongly than before.
  • The only bright spot in exports at the sectoral level is the sharp rise in the electrical equipment industry, which is driving an improvement in the ‘medium-high technology’ sector.

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