Trade data for the US, Germany, Japan and China were released earlier today. While the US, Germany and China had robust export growth that caused their surpluses to swell, Japan’s numbers showed weakness despite the recent drop in the value of the Yen. The dichotomy in readings says a lot about the politics surrounding this difficult economic environment and the associated currency wars.
First, let’s look at the data.
In the US, it was record petroleum exports which flattered the data set. The US is benefitting from the shale oil boom and this is now having a direct impact on the American trade balance as the US trade deficit was the smallest in two years. The deficit came down by 20.7% to $38.5bn. Bloomberg News noted that this figure was lower than any of the estimates that 73 economists gave before the release in a survey that Bloomberg conducted. Bloomberg also noted that the US imported the smallest amount of crude oil in almost 16 years.
In Germany, imports actually declined by 1.3% in December, underlining the weak German domestic demand environment. Exports were surprisingly solid at 0.3% higher than November. So the German figures were dominated by the weak import numbers more than robust export numbers. For the full year, Germany’s trade surplus hit €188bn, which according to the Guardian is the 2nd highest figure since records began in 1950.
In China, the Telegraph reports that the figures were distorted somewhat by the lateness of the Lunar New Year celebrated in China. Nonetheless, the data were good as exports in January grew at a 25% rate. That compares to December’s 14.1% increase. Here’s the important part that contrasts to Germany; import growth was even higher at 28%. Again these figures are distorted somewhat by the calendar. Moreover, I am not sure how China, a country notorious for data collection difficulties is able to report January numbers in early February while Germany is only just now reporting for December. So, the exact numbers should be read with caution. Nonetheless, directionally we see big improvements in China’s trade data telling us that the economic fortunes of the country are improving.
In Japan, the data were weak. In December, the current account was in deficit at Y264.1 bn (equivalent of $2.8 billion). Notice that the Japanese also reported for December like the Germans and unlike the Chinese. Also note that the current account covers trade and overseas income both. For the full year, Japan had a current account surplus of Y4.70trn (equivalent to $50.5 bin). But according to the Wall Street Journal, this is the “smallest since comparable data became available in 1985”. It is also half the levels of the previous year 2011. Moreover, the current account surplus was possible only because of overseas income, because Japan is now running a deficit in goods and services that is also at record high levels. This is the reason Japan has been trying to weaken the currency.
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