US DATA
The US goods trade deficit widened much more than expected in December, to $122.1B ($105.5B expected), from $103.5B in November. That came on both a large drop in exports ($7.8B to $167.5B) and a rise in imports ($289.6B, up $10.8B).
- The standout items in the imports column are industrial supplies (up 18.9% M/M SA and 22.9% Y/Y NSA), with other categories growing by less than the 3.9% M/M SA headline imports growth (including outright contractions in food, autos, and "other" goods, and just 1.7% M/M growth in capital goods and 3.1% in consumer goods).
- It's hard to gauge to what degree that is commodities price related, as these figures are expressed nominally. Industrial supplies include petroleum and petroleum products and we only get further detail in the final release, but the industrial supply imports figure is the highest in 29 months, and is the 2nd consecutive acceleration. And petroleum import prices were only +0.7% Y/Y (NSA) in December
- It's possible this reflects front-running imports ahead of possible tariffs, as US producers attempt to mitigate disruptions and higher costs in their supply chains.
- Bigger picture, exports are down 1.8% Y/Y (NSA), with imports up 15% Y/Y (NSA), with the trade balance ballooning on a seasonally-adjusted basis from $87.6B in December 2023 to the aforementioned $122.1B in December 2024. The 3MMA as a % of GDP is running at around 4.3-4.4%, with the 12MMA at 4%. (The Services surplus is running at a fairly consistent 1% of GDP, so the goods+services balance is set to come in the low-3s % of GDP in the final trade report, the highest since at least October 2022).
- The surprising increase in the trade deficit will be negative for Q4 GDP, despite our contention that stronger capital and consumer imports reflect strong domestic demand and investment prospects.
- And in some senses such data couldn't come at a more sensitive time, given the Trump administration's focus on the trade gap.
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