–Imported Oil Px & Vol Fall; Gap W/ China -$28.1b, Japan -$6.2b

By Joseph Plocek

WASHINGTON (MNI) – U.S. October trade data came in largely as
expected, but the GDP math is favorable for the trade sector to add to
growth in Q4 and there were few signs that Europe’s distress was hurting
trade.

The October trade balance was -$43.5 billion, after -$44.2 billion
in the revised September total.

Imports fell $2.2b and exports fell $1.5b, keeping the trade report
in about the same balance as last month.

About $1.2 billion of the decline in exports was nonmonetary gold
after it posted +$1.6 billion in September.

Nonmonetary gold is not held as a reserve asset and is treated as a
commodity by the Commerce Department using the OECD definitions. It
covers both ‘store of value’ instruments such as gold bricks and coins,
and gold for industrial use (in items like jewelry, computer chips, and
finishings). It is unclear if the last two months’ movement represents
commodities or investment trading, the off-loading or swapping of a
central bank’s holdings to the private sector, or some other industrial
activity, as no further breakdown was provided.

The October import drop was almost all related to oil, representing
about -$1.9 billion or 86% of the total decline. Both the price and
volume of imported crude dropped.

In other import sectors, auto imports were down $615 million but
computers and civilian aircraft rose.

Unadjusted trade gaps by country included: China at -$28.1 billion
after -$28.1 billion in September; Japan -$6.2 billion after -$5.2
billion; and OPEC -$8.3 billion after -$10.4 billion. Europe was -$9.7
billion after -$7.9 billion in September.

China trade has recovered – imports from China were a new record
and exports to China were a high since December 2010. So has Japan
trade after the earthquake, but also in line with last year’s pattern.

Exports to and imports from Europe were both higher on the month,
though the unadjusted export advance was about 1/10th of last year’s
monthly pace. These movements show underlying health in the world
economy, especially Asia.

The real trade balance was -$44.2 billion in October, against a
-$46 billion Q3 average. Trade will add at least 0.2 or 0.3 point to
Q4 real growth if the deficit remains at this level.

**Market News International Washington Bureau: (202)371-2121**

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