U.S. Trade Deficit Widened Slightly in December

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit widened slightly, up from $42.23 billion in November to $43.36 billion. The underlying data were little changed from the month before, with marginal shift in goods exports (down from $121.94 billion to $121.16 billion) and goods imports (up from $183.18 billion to $183.67 billion). The service sector trade surplus also inched up a touch, increasing from $19.02 billion to $19.16 billion. For 2015 as a whole, the trade deficit averaged $42.29 billion, which was not far from the $42.36 billion seen in 2014. Yet, the underlying data reflect some major changes behind the scenes. Goods exports were off sharply, down from an average of $136.05 billion in 2014 to $126.16 billion in 2015, and a similar trend was seen for goods imports, down from $197.84 billion to $183.48 billion.

A fair share of the reduction in goods trade over the past year can be explained by shifts in the petroleum market. Petroleum exports averaged $8.29 billion in 2015, down from $12.03 billion in 2014. Likewise, petroleum imports fell from an average of $27.83 billion in 2014 to $15.17 billion in 2015. In this latest report, the petroleum trade balance widened marginally, up from $5.46 billion to $5.93 billion. Much of the dynamics in these changes over the past year are attributable to sharply lower crude oil prices, and indeed, the average price per barrel in the December calculations ($36.60) was the lowest since January 2005.

The goods exports by sector data were mostly lower in December, including declines for automotive vehicles and parts (down $559 million), industrial supplies and materials (down $414 million), foods, feeds and beverages (down $374 million) and capital goods (down $339 million). These were somewhat offset, however, by increased exports for consumer goods (up $937 million). In contrast, higher goods imports were led by strength in automotive vehicles (up $980 million), industrial supplies and materials (up $507 million) and foods, feeds and beverages (up $181 million). There were decreasing imports for consumer goods (down $631 million) and capital goods (down $27 million).

For manufacturers, global headwinds have had a significantly negative impact on their ability to grow international demand. Manufactured goods exports totaled $1,112.35 billion in 2015 using non-seasonally adjusted data. This was down 6.73 percent from the $1,192.58 billion observed in the same time period in 2014. (Note that we will get seasonally adjusted data on Trade Stats Express when those figures are updated soon to reflect data through the fourth quarter.)

This trend extends to the top four markets for U.S.-manufactured goods: Canada (down from $312.42 billion year-to-date to $280.33 billion), Mexico (down from $240.25 billion to $236.38 billion), China (down from $123.68 billion to $116.19 billion) and Japan (down from $66.83 billion to $62.47 billion). In addition, exports of manufactured goods to the Europe, our second largest region after North America, were also lower year-to-date (down from $333.29 billion to $320.55 billion).

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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