There was absolutely nothing good about the most recent trade data for June. Even what looked like an improvement really wasn’t, suggesting, strongly, that conditions in the global economy are still declining. With Canada falling to recession, blaming a “puzzling” and sharp decline in non-petroleum exports (the US as that nation’s biggest customer), the decline in US import “demand” completing now a full half year is simply confirming.
At first glance, imports fell “only” -0.6% in June year-over-year which seems to be a vast improvement over the alarming -7.4% in May. However, since late 2013, US import activity (much like inventory activity) has fallen into a quarterly pattern (first distinguished via imports from China). The last month in each quarter has been inordinately superior to the other months within it, meaning the relevant comparison for June 2015 is not May 2015 but rather March 2015.
When March’s imports were up 1.8% that was believed to be consistent with the mainstream, orthodox expected rebound since it was seemingly better than February’s -4.4%; however, that +1.8% was appreciably worse than the far more relevant +7.5% from December 2014. In sequence, then, these quarter end “bumps” show the same disquieting downward trend.
The raw decline by itself is concerning, of course, but the fact that this is occurring in imports to the US is totally opposite orthodox ideas about currency and economy. The “rising dollar” was supposed to make imports “cheaper” relative to the pre-dollar exercise, which should have produced an immoderate and significant increase in import activity had domestic demand simply stayed constant. Not only that, the timing of this decline is a dead giveaway as fully coincident to the same troubling experience with exports.
To emphasize that currency point further, the dollar has been, arguably, most diminished among
Originally appeared at: http://davidstockmanscontracorner.com/inside-the-june-trade-report-the-shrinkage-continues/