June’s trade deficit and wholesale sales

Major economic reports released the past week were the Commerce Dept report on our International Trade for June and the June report on Wholesale Trade, Sales and Inventories from the Census Bureau…in addition, this week also saw the Consumer Credit Report for June from the Fed, which reports on non-real estate consumer borrowing, and which indicated consumer credit outstanding grew by a seasonally adjusted $8.9 billion in June, or at a 2.1% annual rate, as non-revolving credit grew at an 3.4% rate to $3,734.6 billion, while revolving credit outstanding fell at a 1.6% rate to $1,343.8 billion..

The major private reports released this week were the July 2024 Services Report On Business from the Institute for Supply Management, which saw their Services PMI rise to 51.7%, up from 48.8% in June, indicating a small plurality of service industry purchasing managers reported increases in various business metrics in July, after a small plurality had indicated decreases in June, and the Mortgage Monitor for August, which now comes from the Mortgage Technology unit of ICE, and which indicated that 3.49% of mortgages were delinquent in June, up from the 3.04% that were delinquent in May, and up from the 3.12% delinquency rate of June 2023, and that 0.35% of all mortgages were in the foreclosure process in June, down from 0.36% of mortgages in foreclosure in May, and down from the 0.42% foreclosure rate of June a year ago….the full Mortgage Monitor for August (pdf), which covers June data, is a comprehensive 24 pages of tables and graphics, with explanatory text..

Trade Deficit was 2.5% Lower in June on Increased Exports of Fossil Fuels and Civilian Aircraft

Our trade deficit decreased 2.5% in June, after ​increasing by a revised 0.7% in May, as both the value our exports and our imports increased, but the value of our exports rose by nearly twice as much….the Commerce Department report on our international trade in goods and services for June indicated that our seasonally adjusted goods and services trade deficit fell by a rounded $1.9 billion to $73.1 billion in June from a revised May deficit of $75.0 billion, which had previously been reported at $75.1 billion.…the value of our June exports rose by a rounded $3.9 billion to $265.9 billion as a $4.4 billion increase to $174.2 billion in our exports of goods was partly offset by a $0.4 billion decrease to $91.7 billion in our exports of services, while the value of our imports rose by a rounded $2.0 billion to $339.0 billion on a $1.9 billion increase to $271.6 billion in our imports of goods and a $0.2 billion increase to $67.5 billion in our imports of services…export prices were on average 0.5% lower in June, which means our real exports were 0.5% greater than the increase in their nominal value, or that our real exports rose on the order of 2.0%, while import prices were virtually unchanged, which means the increase in the value of our imports represents a real increase in imports of the same magnitude​ as the nominal increase….

Greater exports of all end use categories of exports contributed to the nominal $4.4 billion increase in June’s export of goods, led by greater valued exports of capital goods and of industrial supplies and materials….referencing the Full Release and Tables for June (pdf), in Exhibit 7 we find that the value of our exports of capital goods rose by $1,940 million to $54,239 million on a $1,250 million increase in our exports of civilian aircraft, a $513 million increase in our exports of computers, and a $​336 million increase in our exports of semiconductors, which were partly offset by a $309 million decrease in our exports of civilian aircraft engines, while our exports of industrial supplies and materials rose by $1,420 million to $60,180 million as a $580 million increase in our exports of natural gas, $508 million increase in our exports of petroleum products other than fuel oil and a $480 million increase in our exports of fuel oil were partly offset by $500 million decrease in our exports of crude oil…in addition, our exports of automotive vehicles, parts, and engines rose by $743 million to $15,124 million on a $663 million increase in our exports of passenger cars, our exports of foods, feeds and beverages rose by $622 million to $13,338 million on higher exports of soybeans, corn, meat and poultry, and other foods and feeds, and our exports of consumer goods rose by $51 million to $22,583 million….slightly offsetting the increases in those end use export categories, our exports of other goods not categorized by end use rose by $286 million to $7,428 million….

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our goods imports and shows that greater imports of consumer goods and of capital goods were responsible for the increase in our June imports, and that their increase was partly offset by lower imports of industrial supplies and materials.…our​ imports of consumer goods rose by $2,335 million to $65,995 million as a $3,188 million increase in our imports of pharmaceutical preparations was partly offset by a $708 million decrease in our imports of cell phones, while our our imports of capital goods rose by $2,234 million to $80,180 million on a $634 million increase in our imports of semiconductors. a $​5​46 million increase in our imports of telecommunications equipment, a $​4​87 million increase in our imports of electric apparatuses​, and a $340 million increase in our imports of computers...partly offsetting the increases in those categories, our imports of industrial supplies and materials fell by $1,907 million to $54,802 million on a $1,179 million decrease in our imports of crude oil, a $719 million decrease in our imports of ​nuclear fuel materials and a $​5​51 million decrease in our imports of ​iron and steel mill products, while ​our imports of foods, feeds, and beverages fell by $276 million to $17,245​ million, our imports of automotive vehicles, parts, and engines fell by $243 million to $38,664 million, and our imports of other goods not categorized by end use fell by $50 million to $11,312 million…

The press release for this month’s report summarizes Exhibit 19 in the full release pdf for June, which gives us surplus and deficit details on our goods trade with selected countries:

The June figures show surpluses, in billions of dollars, with Netherlands ($4.8), South and Central America ($3.6), Hong Kong ($2.1), Australia ($1.9), United Kingdom ($0.9), Brazil ($0.8), Belgium ($0.7), and Saudi Arabia ($0.1). Deficits were recorded, in billions of dollars, with China ($22.3), European Union ($18.0), Mexico ($13.7), Vietnam ($10.9), Germany ($7.4), Taiwan ($6.4), Ireland ($5.8), South Korea ($5.7), Japan ($4.9), Canada ($4.6), India ($3.7), Italy ($3.1), Switzerland ($2.9), Malaysia ($1.8), France ($1.3), Israel ($0.9), and Singapore ($0.4).

  • The deficit with Italy decreased $1.7 billion to $3.1 billion in June. Exports increased $0.8 billion to $3.0 billion and imports decreased $0.9 billion to $6.1 billion.
  • The deficit with China decreased $1.6 billion to $22.3 billion in June. Exports increased $0.8 billion to $12.5 billion and imports decreased $0.8 billion to $34.8 billion.
  • The balance with Singapore shifted from a surplus of $1.3 billion in May to a deficit of $0.4 billion in June. Exports decreased $0.7 billion to $3.8 billion and imports increased $1.0 billion to $4.3 billion.

In the advance report on 2nd quarter GDP released two weeks ago, our June goods trade was estimated based on the Advance Report on our International Trade in Goods from the Census Bureau, which was also released that week, coincident with the GDP release…that report estimated that our June goods trade deficit was at $96,840 million on a Census basis, down from the $99,369 million goods deficit then reported for May…this report revises those figures and shows that our actual goods trade deficit in June was at $97,352 million on a balance of payments basis, and $96,558 million on a Census basis, and that the May goods deficit was revised to $99,059 million on a Census basis…together, those revisions from the previously published data mean that the 2nd quarter goods trade deficit in goods was roughly $592 million less than the estimates that were used in the GDP report, or about $2.37 billion more at an annual rate, before adjusting for price changes…that change would indicate an upward revision of roughly 0.04 percentage points to 2nd quarter GDP when the 2nd estimate is released at the end of August…

Wholesale Sales Fell 0.6% in June, Wholesale Inventories Rose 0.2%

The June report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $661.5 billion​ in June, down 0.6 percent (±0.4 percent) from the revised May level, but w​a​s up 2.4 percent (±0.7 percent) from ​the value of wholesale sales of June 2023.…the May preliminary estimate was revised to $665.7 billion from the $666.7 billion in sales reported last month, and as a result the April to May percent change was revised from the preliminary estimate of up 0.4 percent (±0.4 percent)* to up 0.3 percent (±0.4 percent)*…as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods produced or finally sold…

On the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods on the shelf or in intermediate storage represent goods that were produced but not sold, and this June report estimated that wholesale inventories were valued at a seasonally adjusted $903.0 billion at month end, up 0.2 percent (±0.2 percent)* from the revised May level, and 0.1​ percent (±0.7%)* higher than in June a year ago, with the May preliminary estimate revised from the $901.7 billion reported last month to $901.2 billion, now a 0.5% increase from April…

In the advance report on 2nd quarter GDP of two weeks ago, wholesale inventories were estimated based on the sketchy Advance Report on Wholesale and Retail Inventories which was released the same day as the GDP release…that report estimated that our seasonally adjusted wholesale inventories were valued at $903,276 million at the end of June, up from $901,480 million in May….those figures total $541 million more than the $903,031 million for June and $901,184 million for May that this report shows, which means that the quarterly increase in 2nd quarter wholesale inventories used in the GDP report was overestimated at about a $2.16 billion annual rate…assuming there’s no revision or imbalance in the inflation adjustment to those inventories, that would suggest that the growth rate of 2nd quarter GDP was overestimated by around 0.04 percentage points, just based on what this wholesale report shows…

 

 

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are picked from the aforementioned GGO posts, contact me…)  

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