U.S. exports show healthy return

SAN FRANCISCO--At least one shipping industry analyst has found a silver lining in the current marketplace:  the yawning balance of trade is narrowing.

According  to Nigel Gault, chief U.S. economist for IHS Global Insight, exports are showing a “welcome” improvement.

“We had anticipated that the gap would narrow, contrary to consensus expectations, but it dropped even more than we thought,” Gault said. “Exports bounced up after a big decline in April, while imports declined as oil import volumes plunged. The improvement in exports combined with stability in non-oil imports is a welcome sign that the headlong decline in world trade volumes has come to an end.”

Trade will make a big positive contribution to GDP growth in the second quarter, probably adding around 1.5 percentage point to the growth rate.

“That boost will be counterbalanced by another big negative contribution from inventories, because much of the decline in imports represents inventory correction,” said Gault. “But overall, the decline in GDP in Q2 should be much shallower than in Q1. The trade figures point to a GDP decline of less than 2 percent.”

The increase in export volumes this month is a hopeful signal that exports have bottomed out, said the economist. Export volumes are at roughly the same level as in January, after a precipitous decline in the second half of 2008.

“But given the weak state of overseas economies, we do not expect the U.S. recovery to be export-led,” said Gault. “As U.S. recovery does begin to take hold it will mean an increase in imports as U.S. demand recovers. As a result, the trade deficit will likely widen later this year.”

 

 

Source: Logistics Management