Any number of special or idiosyncratic factors can confound the understanding of month-to-month changes in our international trade data. Recently, the monthly trade numbers have been buffeted by the tsunami-related events in Japan, changes in oil prices, and the quantity of oil we import. Today, in preparation for tomorrow’s data release for May, we’ll offer some additional information that may help in better understanding how these events and trends might be affecting our trade numbers.
Trade with Japan: The horrific events in Japan (the tsunami and subsequent nuclear reactor-related issues) affected a number of Japanese industries and, through global supply chains, have affected production elsewhere. Since the end of the recession but before the tsunami, our imports from Japan – our fourth largest source of imports – had been rising in all major categories. The United States recorded an average of $10.8 billion a month in Japanese imports during the first quarter of 2011, a 17.2 percent increase from the year before. However, April data showed that imports from Japan were $8.8 billion, a decrease of $3.0 billion, which is equivalent to a 25.5 percent decline from March. How much of this drop was because of production and logistic disruptions? We can’t say for sure, but there are at least two reasons why the $3.0 billion decrease may actually understate the size of the disruption. First, imports from Japan usually increase a couple of percentage points in April from March as part of a typical seasonal pattern (FYI: although the headline trade data for many major products and totals is seasonally adjusted, the data by country is not seasonally adjusted). Second, imports from Japan, as mentioned above, had been increasing and might have continued to increase but for the tsunami, making the drop in April all the more notable.
The table below presents our imports from Japan by major category. What is striking is that the decline in imports from Japan was primarily centered on the motor vehicle industry, an industry for which we know production was greatly reduced because of the tsunami.
|
U.S. Goods Imports from Japan Billions of dollars, not seasonally adjusted |
|||||||
|
Total |
Machinery |
Computers |
Motor vehicles |
Motor vehicle parts |
All other goods |
||
|
Jan. 2011 |
10.0 |
1.8 |
1.4 |
2.8 |
0.9 |
3.0 |
|
|
Feb. 2011 |
10.5 |
1.9 |
1.5 |
2.4 |
1.0 |
3.7 |
|
|
Mar. 2011 |
11.8 |
1.9 |
1.7 |
3.3 |
1.1 |
3.8 |
|
|
Apr. 2011 |
8.8 |
1.7 |
1.5 |
1.1 |
0.9 |
3.7 |
|
When we see the May trade data tomorrow, we’ll be looking to see to what extent imports from Japan rebounded. Usually, imports from Japan decrease about 10 percent between April and May. Based on anecdotal information about the economic recovery in Japan, I’d be surprised if the rebound would be large enough to fill in the April pothole, but we’ll see.
Petroleum products: What was particularly surprising in the April report was that our trade deficit in petroleum-related products fell by $4.2 billion at a time when oil prices were increasing, implying that the improved deficit resulted from an unusually large drop in the quantity of oil we imported. In fact, the average number of barrels we imported a day fell by 11.7 percent from March to April. (Fun fact: How large was our petroleum deficit for the average U.S. household in April? $233, and that’s just for one month, and a month in which the quantity of oil imported fell by a bunch.) History says predicting month-to-month changes in our petroleum deficit is a tricky, tricky business, but given that the quantity of oil we import is fairly inelastic, we shouldn’t be surprised if we see a large swing in our petroleum related deficit in May.
~Mark Doms, Chief Economist, U.S. Department of Commerce
July 11th, 2011
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