March trade deficit and wholesale inventories

Economic reports released during the past week included ​the Commerce Dept report on our international trade in goods and services for March and the Wholesale Trade, Sales and Inventories report for March from the Census Bureau….meanwhile, the Fed released the Consumer Credit Report for March on Wednesday of this week, which indicated that overall consumer credit, a measure of non-real estate debt, had grown by a seasonally adjusted $10.2 billion in March, or at a 2.4% annual rate, as non-revolving credit expanded at a 2.7% annual rate to $3,682.2 billion, while revolving credit outstanding grew at a 1.7% rate to $1,324.6 billion…for the first quarter of 2025, consumer credit increased at a 1.5% seasonally adjusted annual rate, as non revolving credit increased at a 1.2% rate while revolving credit increased at a 2.3% rate…

The week’s major privately issued report included the April 2025 Services ISM® Report On Business, which reported their Services Index rose to 51.6% in April, up from 50.8% in March, indicating that a slightly larger plurality of service industry purchasing managers reported expansion in various facets of their business in March, and the Mortgage Monitor for May (covering March data) from ICE Financial Services, which indicated that 3.21% of all mortgages were delinquent in March, down from the 3.53% delinquency rate in February, but up from the ​3.20% of mortgages that were delinquent in March of 2023, and that 213,000 mortgages were in the foreclosure process, up 4% the mortgages that were in foreclosure in March a year earlier, and that foreclosure starts were up 28% from last March, primarily due to the resumption of VA foreclosure activity…

US Trade Deficit Rose 14.0% to a Record High in March on Record Imports

Our trade deficit rose 14.0% to a record high in March, as both the value of our exports and the value of our imports increased, but the value of our imports increased by quite a bit more…the Commerce Department’s report on our international trade in goods and services for March indicated that our seasonally adjusted goods and services trade deficit rose by $17.3 billion to $140.5 billion in March, from a February deficit that was revised from the originally reported $122.7 billion to $123.2 billion…in rounded totals, the value of our March exports rose by $0.5 billion to $278.5 billion on a $1.3 billion increase to $183.2 billion in our exports of goods​, which was offset by a $0.9 billion decrease to $95.2 billion in our exports of services, while the value of our imports rose by $17.8 billion to $419.0 billion, on a $17.8 billion increase to $346.8 billion in our imports of goods and a decrease of less than $0.1 billion to $72.2 billion in our imports of services….export prices were on average unchanged in March, which means the nominal increase was a real one and that real exports increased by around 0.2%, while import prices averaged 0.1% lower, meaning the increase in real imports was greater than the nominal decrease by that ​small percentage, and that real imports likely rose around 4.5%…

Our exports of goods increased $1.3 billion in March largely due to greater exports of industrial supplies and materials and of automotive products, which were partly offset by lower exports of capital goods…referencing the Full Release and Tables for March (pdf), in Exhibit 7 we find that our exports of industrial supplies and materials rose by $2,172 million to $64,629 million on a $781 million increase in our exports of natural gas, a $698 million increase in our exports of non-monetary gold, and a $302 million increase in our exports of natural gas liquids, which was partly offset by a $378 million decrease in our exports of petroleum products other than fuel oil, and that our exports of automotive vehicles, parts, and engines rose by $1,173 million to $15,394 million on a $911 million increase in our exports of passenger cars…in addition, our exports of foods, feeds and beverages rose by $866 million to $13,945 million, led by a $762 million increase in our exports of soybeans, while our exports of other goods not categorized by end use rose by $89 million to $7,528 million…partly offsetting the higher exports in those end use categories, our exports of capital goods fell by $1,499 million to $57,838 million, as a $1,778 million decrease in our exports of civilian aircraft and a $330 million decrease in our exports of semiconductors was partly offset by a $726 million increase in our exports of computer accessories. and our exports of consumer goods fell by $241 million to $21,769 million as a $846 million increase in our exports of pharmaceutical preparations was offset by a $788 million decrease in our exports of gem diamonds…

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our January goods imports and shows that the big March increase in our imports was led by increased imports of consumer goods, capital goods, and automotive products, which were partly offset by lower imports of industrial supplies and materials….our imports of consumer goods rose by $22,487 million to $103,166 million as a $20,924 million increase in our imports of pharmaceutical preparations, a $580 million increase in our imports of artwork and other collectibles, and a $412 million increase in our imports of cotton apparel and household goods were partly offset by a $550 million decrease in our imports of cellphones, while our imports of capital goods rose by $3,715 million to $93,097 million on a $2,040 million increase in our imports of computer accessories, a $496 million increase in our imports of generators and accessories, a $474 million increase in our imports of semiconductors, and a $457 million increase in our imports of telecommunications equipment…in addition, our imports of automotive vehicles, parts and engines rose by $2 ,552 million to $40,987 million on a $2,139 million increase in our imports of passenger cars and a $461 million increase in our imports of trucks, buses, and special purpose vehicles…partly offsetting the increased imports in those end use categories, our exports of industrial supplies and materials fell by $10,723 million to $75,526 million, as a $10,333 million decrease in our exports of finished metal shapes, a $1,761 million decrease in our exports of non-monetary gold, and a $1,229 million decrease in our exports of crude oil were partly offset by a $671 million increase in our exports of copper, a $651 million increase in our exports of petroleum products other than fuel oil, and a $525 million increase in our exports of nuclear fuel materials, while at the same time, our imports of foods, feeds, and beverages fell by $72 million to $19,551 million, and our imports of other goods not categorized by end use fell by $149 million to $11,946 million….

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

The March figures show surpluses, in billions of dollars, with Netherlands ($4.5), South and Central America ($3.2), Hong Kong ($1.9), United Kingdom ($1.2), Singapore ($0.5), Brazil ($0.5), and Saudi Arabia ($0.2). Deficits were recorded, in billions of dollars, with European Union ($48.3), Ireland ($29.3), China ($24.8), Mexico ($16.8), Switzerland ($14.7), Vietnam ($14.1), Taiwan ($8.7), India ($7.7), Germany ($7.5), South Korea ($6.8), Japan ($5.8), Canada ($4.9), Italy ($4.4), France ($3.9), Malaysia ($3.2), Australia ($1.0), Israel ($1.0), and Belgium ($0.1).

• The deficit with Ireland increased $15.3 billion to $29.3 billion in March. Exports increased $0.1 billion to $1.4 billion and imports increased $15.5 billion to $30.7 billion.
• The deficit with France increased $2.4 billion to $3.9 billion in March. Exports increased $0.1 billion to $4.0 billion and imports increased $2.6 billion to $7.9 billion.
• The deficit with Switzerland decreased $4.1 billion to $14.7 billion in March. Exports increased $1.1 billion to $3.5 billion and imports decreased $3.0 billion to $18.3 billion.

In the advance estimate of 1st quarter GDP published last week, our March trade deficit in goods was estimated based on the sketchy Advance Report on our International Trade in Goods, which was released the day before the GDP release…that report estimated that our seasonally adjusted goods trade deficit was at $161,985 million on a Census basis in March, on goods exports valued at $180,761 million and goods imports valued at $342,746 million…in Exhibit 5, this report revises that advance report and shows that our actual Census basis goods trade deficit in March was at $163,169 million, on adjusted goods exports of $181,103 million and adjusted goods imports valued at $344,272 million…at the same time, the February goods trade deficit was revised from the $147,849 million indicated in that advance report to $147,893 million…combined, those revisions from the previously published figures indicate that the nominal trade in goods deficit used in the first quarter GDP report was $1,228 million too low, which works out to be around $4.9 billion on an annualized basis…that would mean that 1st quarter GDP would need to revised 0.07 percentage points lower to account for the revisions indicated by this report..

March Wholesale Sales Rose 0.6%, Wholesale Inventories were 0.4% Higher

The March report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at “$697.9 billion, up 0.6 percent (±0.7 percent)* from the revised February level and were up 6.1 percent (±0.9 percent) from the revised March 2024 level”… the February preliminary estimate of wholesale sales was revised from the $696.4 billion reported last month to $693.8 billion, which meant that the “The January 2025 to February 2025 percent change was revised from the preliminary estimate of up 2.4 percent (±0.4 percent) to up 2.0 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 sold..

On the other hand, the monthly change in private inventories is a major factor in GDP, since additional goods sitting in a warehouse represent goods that were produced but not sold, and this March report estimated that wholesale inventories were valued at “$907.5 billion at the end of March, up 0.4 percent (±0.2 percent) from the revised February level. Total inventories were up 2.2 percent (±0.7 percent) from the revised March 2024 level.“, with the February preliminary inventory estimate concurrently revised from the originally reported $902.3 billion to $903.9 billion, which meant the change in inventories from January to February was revised from the increase of 0.3 percent (+/-0.2%)* reported last month to an increase of 0.5 percent (±0.2 percent)* from January.…

In the advance report on 1st 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 day before the GDP release…that report estimated that our seasonally adjusted wholesale inventories were valued at $908,008 at the end of March, up from $903,613 billion in February…that’s a net $163 million more than the $907,524 billion and $903,934 billion that this report shows, which would imply that the quarterly change in 4th quarter wholesale inventories was overestimated at almost a $0.7 billion annual rate in the GDP report….assuming there’s no distortion caused by reweighting the inflation adjustments to those inventories, that would mean that the growth rate of 1st quarter GDP was overestimated by 0.01 or 0.02 percentage points based on what this 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 ​chosen from the aforementioned GGO posts, contact me…)