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Posts Tagged ‘trade deficit’

UPDATE: The trade gap came in wider than expected at $47.8 billion.

This is a big jump from the $43.3 billion gap from October.

Analysts had expected a $45 billion gap.

Here’s a chart from the report.

Also from the report, some commentary about trade with some of our major partners.

• The goods deficit with Canada increased from $2.2 billion in October to $3.0 billion in November. Exports decreased $1.3 billion (primarily automobiles, parts, and accessories and other household goods) to $23.3 billion, while imports decreased $0.5 billion (primarily nonmonetary gold, civilian aircraft, and other precious metals) to $26.3 billion.

• The goods deficit with China decreased from $28.1 billion in October to $26.9 billion in November. Exports increased $0.2 billion (primarily civilian aircraft, engines, equipment, and parts; corn; and passenger cars) to $9.9 billion, while imports decreased $1.0 billion (primarily household goods and apparel) to $36.8 billion.
• The goods deficit with European Union increased from $8.0 billion in October to $9.7 billion in November. Exports decreased $1.4 billion (primarily fuel oil, drilling and oilfield equipment, and nonmonetary gold) to $22.0 billion, while imports increased $0.4 billion (primarily petroleum products, passenger cars, and household goods) to $31.7 billion.

ORIGINAL POST: First big datapoint of the day: At 8:30 AM the November trade deficit comes out.

Analysts expect a gap of $45 billion. That’ would be ups lightly form the $43.5 billion in October.

Technically, the trade gap is subtracted from GDP, but actually the higher the number the better, since that means more trade and that means more economic activity.

We’ll have the number here LIVE when it comes out.

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The Bank of England’s Monetary Policy Committee is due to meet today, when it is expected to keep interest rates at a record low of 0.5 per cent, despite inflation soaring.

It will be the 32nd consecutive month that the interest rate has been held at this level.

According to the Consumer Price Index, inflation hit 5.2 per cent in September, almost triple the Government’s target.

There is increasing concern that the UK economy could fall into recession in the final quarter of 2011, but a further increase in quantitative easing (QE) is not anticipated.

Last month the MPS increased QE by £75 billion in an effort to boost the economy, but the situation has continued to deteriorate.

However, analysts believe that further action could be taken early next year if the economy continues to flounder.

The ongoing eurozone crisis is considered by the Bank of England to be a major threat to the UK’s economic recovery, and EU leaders remain unable to agree on a solution.

Greece, Portugal and Ireland have already sought bailout funding after their borrowing costs reached critical levels and there is now concern that Italy could also be forced to seek help.

Italy’s difficulties caused the Confederation of British Industry to reduce its growth forecasts for the UK economy from 1.3 per cent to 0.9 per cent for 2011.

It also downgraded its forecast for 2012, from 2.2 per cent to 1.2 per cent.

The crisis in the eurozone has caused international demand for UK goods to fall, with the trade deficit widening to £9.8 billion in September from £8.6 billion in August.

This morning, there was speculation that Germany was planning to create a two-tier eurozone, with struggling countries leaving the single currency.

This has been denied by Germany’s chancellor, Angela Merkel.

The Bank of England’s Monetary Policy Committee is due to meet today, when it is expected to keep interest rates at a record low of 0.5 per cent, despite inflation soaring.

It will be the 32nd consecutive month that the interest rate has been held at this level.

According to the Consumer Price Index, inflation hit 5.2 per cent in September, almost triple the Government’s target.

There is increasing concern that the UK economy could fall into recession in the final quarter of 2011, but a further increase in quantitative easing (QE) is not anticipated.

Last month the MPS increased QE by £75 billion in an effort to boost the economy, but the situation has continued to deteriorate.

However, analysts believe that further action could be taken early next year if the economy continues to flounder.

The ongoing eurozone crisis is considered by the Bank of England to be a major threat to the UK’s economic recovery, and EU leaders remain unable to agree on a solution.

Greece, Portugal and Ireland have already sought bailout funding after their borrowing costs reached critical levels and there is now concern that Italy could also be forced to seek help.

Italy’s difficulties caused the Confederation of British Industry to reduce its growth forecasts for the UK economy from 1.3 per cent to 0.9 per cent for 2011.

It also downgraded its forecast for 2012, from 2.2 per cent to 1.2 per cent.

The crisis in the eurozone has caused international demand for UK goods to fall, with the trade deficit widening to £9.8 billion in September from £8.6 billion in August.

This morning, there was speculation that Germany was planning to create a two-tier eurozone, with struggling countries leaving the single currency.

This has been denied by Germany’s chancellor, Angela Merkel.

WASHINGTON (AP) — After years of trying, Congress is taking another stab at retaliating against what many see as Chinese manipulation of its currency to make its exports to the United States cheaper and U.S. exports more expensive.

The Senate is expected to take up legislation Monday to impose higher U.S. duties on Chinese products to offset the perceived advantage that critics say China gets by undervaluing its currency. It’s a political given here that China’s economic policy has damaged American manufacturers and taken away American jobs.

Beijing denies that its exchange rate is responsible for the huge trade deficit that the United States has with China, and it’s not clear that lawmakers have the political will to follow through.

While the Senate bill has bipartisan support and is expected to clear a procedural hurdle Monday evening, intense lobbying against it by American-based multinational corporations and their trade associations could spell trouble for the legislation.

Moreover, the Obama administration, like the Bush administration before it, doesn’t like the bill, saying quiet diplomacy is a better way to influence Chinese policy and warning that overt sanctions could lead to a destructive trade war.

Sens. Chuck Schumer, D-N.Y., and Lindsey Graham, R-S.C., among others, have been trying for at least six years to pass legislation making it easier to slap higher tariffs on Chinese goods to compensate for what they say is Beijing’s effort to keep its currency, the yuan, undervalued against the dollar, making its exports cheaper and U.S. exports to China more expensive.

Under U.S. pressure, China did take steps last year that allowed for some flexibility in the exchange rate, but the yuan has risen only a few percentage points since then, and economists say it is still undervalued against the dollar by as much as 40 percent.

Schumer and others say that’s a major reason that some 2 million U.S. jobs have been lost to Chinese competitors in the last decade and that the U.S. trade deficit with China last year hit a record $273 billion, some 43 percent of the entire U.S. trade gap.

“They get away with economic murder and thus far our country has just said, ‘Oh, we don’t care,’” Schumer said. “This legislation will send a huge shot across China’s bow.”

Among Republicans, presidential hopeful Mitt Romney has said he would sanction China for keeping its currency artificially low.

The Senate bill, which does not specifically mention China, has two main components:

—Up to now, the Treasury Department has had to declare that a country was willfully manipulating its currency to trigger a response, something the Bush and Obama administrations have avoided doing. The legislation would require Treasury to determine only that another country’s currency is misaligned, then give its government 90 days to make corrections before countervailing duties are imposed.

—The bill makes it easier for specific industries to petition the Commerce Department for redress under claims that the misaligned currency of China or another country amounts to an export subsidy. That more narrowly focused provision, sponsored by Sens. Sherrod Brown, D-Ohio, and Olympia Snowe, R-Maine, passed the House last September on a 348-79 vote. The last Congress, however, ended before the Senate could take it up.

Supporters point to studies by the Peterson Institute for International Economics that say a 20 percent appreciation of the yuan would reduce the U.S. trade deficit by up to $120 billion and create a half-million U.S. jobs. The more liberal Economic Policy Institute estimates that a 28.5 percent appreciation would create more than 2 million jobs.

Opponents of the bill, including the U.S. Chamber of Commerce and the Business Roundtable, whose members do business overseas, paint a different picture. A letter to Senate leaders from more than 50 such groups warned that unilateral action against China would likely result in retaliation against U.S. exports to China, possibly violate World Trade Organization rules and do little to create U.S. jobs because other low-cost manufacturing countries would take up the slack if Chinese goods became more expensive.

There’s also concern that a trade war with China would remove incentives for China to improve its record on intellectual property rights or cooperate in easing tensions with North Korea. The conservative Club for Growth, which holds sway among many Republicans, opposes the Senate bill, saying it would raise prices for American consumers.

China denies that the exchange rate is the cause of the huge trade imbalance, saying that the United States could help itself by lifting a ban on sales of high technology goods.

White House press secretary Jay Carney would only say that the administration is reviewing the Senate bill. If the measure does make it through the Senate, it faces an uncertain future in the House.

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Official figures today revealed Japan’s exports rose in August for the first time in six months – suggesting the world’s third largest economy is continuing its recovery from the devastating earthquake and tsunami which struck in March.

According to the Ministry of Finance, exports were 2.8% higher last month on an annual basis but this was much less than the 8% rise expected by analysts.

The figures suggest the strong yen continues to hurt Japan’s manufacturers – it is currently hovering around 76.30 to the US dollar – dangerously close to its post-war high of 75.95 yen seen last month.

The yen has been appreciating for some time as global investors see it as a safe haven at a time of economic uncertainty.

However, it has implications and it is forcing manufacturers to consider relocating and some have even suggested moving their operations overseas.

Exports helped the economy recover from recession earlier than its counterparts more than two years ago but the twin disasters disrupted supply chains and forced some of Japan’s largest exporters to halt production.

In the meantime, imports surged 19.2% on an annual basis, due to hikes in oil prices.

As a result, the economy posted a huge trade deficit of 775.3 billion yen – the biggest since records began in 1979.

Last week, the Cabinet Office revealed the Japanese economy performed worse than originally thought in the April to June period.

Gross Domestic Product (GDP) contracted by 2.1% on an annual basis in the three-month period, compared with an initial estimate of 1.3%.

The economy is currently in recession and has now contracted for three consecutive quarters.

Japan lost its place as the world’s second largest economy to China last year and it faces several headwinds including years of deflation and a mountain of debt.

Debt currently stands at almost twice the country’s annual economic output and is the highest of any industrialised nation.