–Consumer Goods Imprts Fall-iPhone?; Gap W/China -$29.5b;W/Japan -$7b

By Joseph Plocek

WASHINGTON (MNI) – U.S. October trade data showed a somewhat
unfavorable mix of declining flows along with a wider gap. Still,
quarterly trends are positive for growth.

The October trade balance was -$42.2 billion and an only slightly
wider gap was expected. But the report included drops in imports (-$4.9
billion) and exports (-$6.8 billion), and the September trade balance
was narrowed to -$40.3 billion from the -$41.5 billion previously

October’s imports drop stemmed from a $3.6 billion decline in
consumer goods (where cell phones fell $1.3 billion, perhaps related to
iPhone ordering, and pharmaceuticals declined $879 million. There were
also a $449 million drop in computer accessories and a $456 million
decline in autos. Non-oil imports were their lowest since August 2011.

Crude oil and related imports rose $2.5 billion as prices and
volumes increased. The average price of imported crude oil was $99.75 a

The exports drop stemmed from a $1 billion dip in aircraft, a
-$2.9 billion net change in industrial supplies (oil, nonmonetary gold,
and chemicals fell), a $1.4 billion fall in foods (possibly a drought
effect), and a $0.5 billion decline in gems/jewelry.

The November-December Los Angeles dock strike should not have
impacted this trade report. This event lasted about a week and was
estimated to have affected about $1 billion per day in trade. A
comparable event in 2002 in southern California cut the monthly trade
gap by about 10% when it occurred and was followed by a jump in the gap
after it settled. So the effects on the next two months’ data are up in
the air.

Unadjusted trade gaps by country: China hit another new high -$29.5
billion after -$29.1 billion in September. Japan was -$7 billion after
-$4.8 billion, and OPEC was -$8.6 billion after -$7.1 billion. The
surplus with Central-South America was a record $2.6 billion after $2.2
billion in September, as exports to Brazil picked up.

The real trade balance for October has narrowed from its Q3
average, and will add perhaps 0.5 point to Q4 GDP, a good result.
November’s dock strike could hurt this calculation ahead, though.

State data show that California is responsible for about $13.5
billion in monthly exports and $31 billion in imports. Los Angeles and
Long Beach are probably outsized portions of these totals, and no doubt
a lot of the trade is with Asia.

**MNI Washington Bureau: (202)371-2121**

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