The June 2011 U.S. trade deficit increased $2.3 billion to -$53.1 billion. This is a 4.4% monthly increase in the trade deficit. Both imports and exports decreased, showing a slowing of global trade. The trade deficit wasn't this big since October 2008. Exports decreased -$4.1 billion, or -2.34% from last month while imports decreased -$1.9 billion, or 0.83%. China imports, not seasonally adjusted, increased 4.9% in June, with a trade deficit of -$26.66 billion.
Oil imports came off last month's record highs with a petroleum end use trade deficit of -$29.61 billion, for June, a decrease of -3.2%. Japan imports shot back up as they recover from disaster, $1.15 billion, or 13.79% from May, leading to a monthly Japan trade deficit increase of 53%, not seasonally adjusted. May, last month, the total trade deficit had increased by 16.52%.
Expect Q2 2011 GDP to be revised below 1%, as we noted in the advance GDP overview.
The United States basically has two major ongoing problems with the trade deficit, Chinese goods and Oil imports. Below is the not seasonally adjusted import price index for oil fuel. In June the average price for a barrel of oil was $106.
Below is the raw customs basis accounting of the trade deficit with China, not seasonally adjusted. China alone was 37.79% of the goods trade deficit for June. This includes oil. For comparison's sake the not seasonally adjusted goods trade deficit by Census accounting methods was $69.48 billion.
Below are imports vs. exports of goods and services from January 2007 to June 2011. Notice how much larger imports are than exports, but also notice the growth, or rate of change between months of U.S. exports. The June export decline was virtually all goods, services was basically unchanged.
Below is the list of good export decreases from May to June, seasonally adjusted. The drop is due to industrial supplies and materials, which includes fuel oil. Fuel oil was 21.33% of the total export drop in this category. Capital goods also took a major hit with industrial engines and machines being 39.83% of the total decline in capital goods exports.
- Automotive vehicles, parts, and engines: +$0.045 billion
- Industrial supplies and materials: -$2.007 billion
- Other goods: -$0.522 billion
- Foods, feeds, and beverages: -$0.804 billion
- Capital goods: -$1.504 billion
- Consumer goods: +$0.748 billion
Exhibit 7 gives Census accounting method breakdown for exports.
Here are the goods import monthly changes, seasonally adjusted. Notice the trade deficit increased while industrial materials dropped. Oil and Petroleum products was 70.79% of industrial materials imports decline.
- Industrial supplies and materials: -$2.215 billion
- Capital goods: -$0.131 billion
- Foods, feeds, and beverages: +$0.122 billion
- Automotive vehicles, parts, and engines: -$0.176 billion
- Consumer goods: -$0.107 billion
- Other goods: +$0.659 billion
Running a trade deficit in advanced technology is not a good sign for those jobs of tomorrow. This deficit is increasing almost every month, meaning we are literally outsourcing America's future.
Advanced technology products exports were $24.7 billion in June and imports were $33.5 billion, resulting in a deficit of $8.8 billion. June exports were $1.3 billion more than the $23.3 billion in May, while June imports were $2.2 billion
more than the $31.2 billion in May.
Here is the breakdown with major trading partners, not seasonally adjusted. China is the worst trade deficit, with $26.7 billion, with last month's China deficit being $25 billion. We are China's export dumping ground.
OPEC can be assumed to be oil and it increased for June, but is not seasonally adjusted. Still we see every month, our problem is clearly China and oil imports. The amounts in parenthesis are May's deficit figures. Notice how the trade surplus list is super short.
The June figures show surpluses, in billions of dollars, with Hong Kong $2.4 ($2.1 for May), Australia $1.4 ($1.2), Singapore $1.0 ($0.8), and Egypt $0.3 ($0.4).
Deficits were recorded, in billions of dollars, with China $26.7 ($25.0), OPEC $13.8 ($11.3), European Union $9.8 ($8.8), Mexico $6.4 ($6.3), Japan $4.0 ($2.6), Germany $4.0 ($3.8), Venezuela $3.3 ($3.1), Nigeria $3.0 ($2.3), Canada $2.8 ($2.7), Ireland $2.8 ($2.4), Taiwan $1.8 ($1.5), and Korea $1.6 ($1.3).
Once again, we are back on track for record breaking trade deficits, which detract from U.S. GDP, even with a slowing global economy. In 2008, we broke monthly trade deficit figures of $60 billion.
Below is a graph of trade deficit with China, per year. 2010 was a record for a trade deficit with China. With 2011 having a China trade deficit, accumulated of -133.413 billion by June, we're well on our way to break last year's record.
You might ask what are these Census Basis versus Balance of Payment mentioned all over the place? The above mentions various accounting methods so we're comparing Apples to Apples and not mixing the fruit. The trade report in particular is difficult due to the mixing of these two accounting methods and additionally some data is seasonally adjusted and others are not. One cannot compare values from different accounting methods and have that comparison be valid.
In a nutshell, the Balance of Payments accounting method is where they make a bunch of adjustments to not count imports and exports twice, the military moving stuff around or miss some additions such as freight charges. The Census basis is more plain raw data the U.S. customs people hand over which is just the stuff crosses the border. The 2005 chain weighted stuff means it was overall modified for a price increase/decrease adjustment in order to remove inflation and deflation time variance stuff.
Bottom line, you want just the raw data of what's coming into the country and going out, it's the Census basis and additionally the details are only reported in that accounting format. Additionally the per country data is not seasonally adjusted so watch out trying to add those numbers into the overall trade deficit. It's a statistical no-no to mix seasonal and non-seasonally adjusted numbers.
The Census is also getting into the graphing game with some nice pie charts breaking down exports by country, as well as a chart showing petroleum as an overall percentage of the trade deficit. No surprise China eats the pie on goods imports, yet where oil is on their chart is a mystery due to not showing OPEC grouped.