Archive for the ‘trade’ Category

At first glance the contraction in the trade deficit for October looks positive. I’m generally wary of seasonally adjusted data — not because seasonal effects don’t exist but because I prefer to see the raw data and the algorithm used to do the smoothing. Non seasonally adjusted data for the trade in goods is available here.


A seasonal plot of the trade deficit, derived from 22 years of data, is shown in the next chart.

seasonal deficit

From that chart we see that October is typically a larger deficit month. That should mean that a reduction in the month-on-month deficit in October 09 is good news. However October (along with March) is typically the biggest month for exports, and October is the biggest month for imports. While exports of goods grew 9.7% in October, compared to an average October growth of 7.4% from 1987-2008, imports were up 3.9% rather than the 8% seen on average from 87-08. Does that signal weak consumer demand? That interpretation seems consistent with what we know about retail sales and rail freight movements.

Outbound and inbound container movements from the ports of Los Angeles, Long Beach and New York/New Jersey are shown next. Note the clear seasonal pattern in the inbound container data.

inbound containers

The outbound container data, while oscillating a bit, seems fairly flat.

outbound containers

Is this data positive? At best we need to see how the data tracks between now and the end of Q1 2010 but to me it looks more indicative of an L shaped recovery than an indication of a V shaped rebound that many are wishing for.

(Mathematica was used for all retrieving, processing, and presenting of data in this article)


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An interesting article over on SeekingAlpha recently “Baltic Dry Index’s fall misleads investors.” The author pointed out that while the BDI is down, there is also a surplus of ships, so that the BDI weakness is not entirely due to lower levels of trade. Among the discussions that followed was a comment/question about the seasonality of imports and exports. I collected data from the Port of Los Angeles and trade the Census Bureau. The chart below shows US exports of goods (not services) plotted against port activity at Los Angeles. Not surprisingly a good correlation but I’m not sure if you can glean any seasonal trends from the data (and the data pre-2000 is much the same).

US goods exported and outward container TEUs

US goods exported and outward container TEUs

The import data correlation is not quite as good as the export data but it is tempting to conclude that some sort of seasonal pattern exists with import lows earlier in the year. Incidentally for a very clear example of a seasonal trade pattern have a look at imports from China.

US goods imported and inward container TEUs

US goods imported and inward container TEUs

So part of the rebound in import activity could be viewed as a seasonal pattern. We can assume that the decline in imports reflects the fall in consumer demand and/or a fall in anticipated consumer demand by importers.

Pretty much every metric you can find collapsed (overshot?) early in 09. The data shows an increase in containers being moved since the numbers collapsed, and an increase in trade in (declining) dollar terms, but also shows that we are some ways off from a true recovery.

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