Main takeaways:
  • Net exports likely to be a drag on growth again (~0.4pp).
  • Real imports dropped in the last three months, but the trend in the last 12-months is still a healthy 4.6% growth pace.
  • Weak US exports hit by strong dollar and sluggish global trade.

Real non-petroleum exports are down 2% in Oct/Nov vs Q3 and imports are down 0.6% in the same comparison. Excluding petroleum, exports volume contracted by 1.6% and imports by 0.4%.

Trade results for October/November, if repeated in December, would lead to another negative contribution of external trade to growth of around 0.4pp. But negative contribution from external trade to growth, per se, does not imply overall GDP growth will be weak (see for instance the negative contributions from net exports to growth in the 1997-2005 period)

The charts below show the volumes of non-petroleum exports and imports. Exports volume is flat while imports volume is growing at around 5%.

Last 20 years (trend shows last 2 years)
Last 3 years (trend shows last 12 months)
YoY growth

The jump in import growth precedes the stronger USD and coincides with an upturns in job creation and consumption that happened in 2014 -- therefore not likely to be a strong consequence of the currency strength and import substitution (although it may play some role).
The slowdown in exports, however, happened at the turn of the year, and therefore could potentially be a quick response to the strenghtening of the dollar that started in mid-2014.

However, the chart below shows that US exports are moving roughly in tandem with world exports. US exports relative to world exports dropped since the start of 2015, but the size of the adjustment does not suggest that the dollar strengthening is playing a major role for weak US exports.

Of course it could be just a matter of time for US exports to shrink relative to world exports, but the recent weak performance seems more likely a result of sluggish world trade rather than dollar strength.

Meanwhile, the ISM export orders improved a bit but still do not suggest upside in the near term.