Trade Data for October and January-October 2013
Bottom line: This was the best set of trade data in a long time, probably since mid-2012. The headline is that the trade deficit shrank significantly in October, but the key development responsible for that outcome is the sharp recovery in high-tech exports in the August-October period. There are other positives, notably that imports are also rising, led by machinery and raw materials.
- The trade deficit, on a seasonally-adjusted basis and excluding ships, aircraft, diamonds and fuels, fell by $200mn. In October to $1,234mn – its lowest level since May.
- High-tech exports seem to have turned the corner and, on a trend basis, have posted four successive months of increases, each larger than the one before. The weakness apparent in this sector over the last 18 months seems to have ended – but it is not clear why or how, given the slowing global economy and the problems posed by the strong shekel.
- Within high-tech exports, pharmaceuticals have finally stopped falling and managed a slight gain in October – although for January-October they are down by 13% compared to the same period in 2012. Electronics and optical products posted strong gains.
- Imports of investment goods continue to trend upwards – and now they are being lead by purchases of machinery and equipment, rather than by vehicles , as was the case until August.
- Imports of raw materials are also gradually rising. These two elements of import activity suggest that manufacturers are not cutting back current production and are also investing in future expansion.
Graph: Annualised percentage change in exports of high technology sectors