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The Brazilian president is in a stronger position to win in elections next year following his defiant stance on President Trump’s tariffs.
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Samantha Pearson
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Tag: Trade Figures
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Trump’s Tariffs Hand Lula a Political Gift in Brazil
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China’s Exports Unexpectedly Contract
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Exports contracted in October from a year earlier, dragged by a high base of comparison and cooling overseas demand after months of front-loading.
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Import prices climb 0.8% in January, up 0.7% minus fuel
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Story developing. Stay tuned for updates here.
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Russian ruble slides to 16-month low against U.S. dollar as capital flight, shrinking trade surplus bite
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The Russian ruble plunged to its lowest level against the U.S. dollar in more than 16 months on Monday, as blowback related to President Vladimir Putin’s bloody invasion of Ukraine continued to weigh on the currency.
The U.S. dollar
USDRUB,
+2.17%
surged to 101.74 rubles on Monday, according to FactSet data. That’s the weakest level for the Russian currency since March 28, 2022. Since the start of the year, the dollar has gained more than 38% against the ruble, making the ruble one of the worst performing major emerging-market currencies of the year compared with the greenback.Weakness in the ruble has intensified over the past week weeks, and just a few days ago the Russian central bank announced it would halt buying of foreign currency on the open market through the end of the year. Instead, it will rely on Russia’s National Wealth Fund’s largess to supply them. The decision was enacted with the intention of “reducing volatility” in financial markets. The central bank has also said it’s launching a digital-ruble pilot program.
Economists, including Konstantin Sonin, a political economist at the University of Chicago, have blamed capital flight and falling budget revenues (due to lower oil and gas income and tax revenue) for the ruble’s troubles.
Data released by Russia’s central bank last week showed Russia’s current-account surplus has shrunk markedly during the first seven months of the year to an estimated $25.2 billion, compared with $165.4 billion during the same period in 2022. The central bank blamed the decline on a shrinking trade surplus caused by the drop in crude oil prices since the first half of 2022.
The Bank of Russia, the country’s central bank, has attempted to shore up the ruble with little benefit. Last month, the central bank hiked interest rates by 100 basis points, the first increase since before Putin ordered the invasion of neighbor Ukraine in February 2022. It hinted that more hikes were possible.
A weak ruble was one reason for the hike, as the weak currency has caused inflation to accelerate.
While the ruble remains weak, it’s still holding above its lows around 130 to the dollar seen in March 2022, weeks after the West imposed a first round of sanctions on Moscow following the invasion of Ukraine, which has morphed into a bloody stalemate with no end in sight.
The annual inflation rate rose to 4.5% in July from 3.25%, but economists at Goldman Sachs warned in a note earlier this month that inflation will likely head above the bank’s target again.
“With continuing loose fiscal policy, we expect inflation to continue to rise throughout the year to +7.0% yoy [year-over-year] in December, above the CBR’s July inflation forecast range of +5.0% – +6.5%,” said a team of economists led by Kevin Daly.
Russian officials have blamed the ruble’s latest bout of weakness on the central bank. Oreshkin Maxim, Putin’s economic aide, wrote in an editorial published in state media outlet Tass on Monday, that “loose monetary policy” was to blame for the weak ruble and urged action on that front.
“The Central Bank has all the necessary tools to normalize the situation in the near future and ensure that lending rates are reduced to sustainable levels,” he wrote.
Many economists and currency strategists expect the ruble’s slide to continue. However, a recent rebound in global crude-oil prices is leading to a modestly improved outlook.
In the U.S., West Texas Intermediate crude for September settled at $84.40 a barrel on Wednesday, its highest level of 2023, according to FactSet data. That reflects a wider trend of rising energy prices globally. However, prices remain well below the peak of roughly $130 a barrel from March 2022, when prices spiked in the immediate aftermath of the invasion.
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Germany’s Trade Surplus Fell in May as Exports Ticked Down
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By Ed Frankl
Germany’s trade surplus fell unexpectedly on month in May, as exports declined marginally and imports rose, a sign that domestic demand could be improving despite a global economic slowdown, as the country’s economy tries to shake off the recession it suffered in the winter.
The country’s adjusted trade surplus–the balance of exports and imports of goods–dipped to 14.4 billion euros ($15.72 billion) in May, compared with a revised EUR16.5 billion in April, data from the country’s statistics office Destatis showed Tuesday.
In May, exports ticked down 0.1% on month on a calendar and seasonally adjusted basis to EUR130.5 billion, suggesting global demand for German manufacturing goods receded somewhat.
Economists polled by The Wall Street Journal expected the trade balance at EUR17.6 billion and exports to rise by 0.5%.
However, imports increased 1.7% to EUR116.1 billion, a sign that domestic demand could be growing. Domestic consumption slumped in Germany over the winter as the economy suffered a recession, contracting by 0.5% in the fourth quarter of 2022 and 0.3% in the first of this year.
Outside the European Union, the country receiving the most German exports in May was the U.S., though exports there declined by 3.6% on month, Destatis said. Exports to China increased 1.6%, while they rose by 5.8% to the U.K., it added.
Write to Ed Frankl at edward.frankl@wsj.com
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U.S. trade deficit jumps 23% to six-month high as imports rebound
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The U.S. trade deficit jumped 23% in April to a six-month high of $74.6 billion, reflecting an increase in imports such as cell phones and foreign autos. Exports fell.
The trade gap rose $14 billion from $60.6 billion in March.
Larger deficits subtract from gross domestic product, the official scorecard for the U.S. economy. The trade deficit has bounced around sharply since last year and has had an unusually large impact on GDP.
Key details: Imports rose 1.5% to $323.6 billion in April. The biggest increases were in autos, parts and consumers goods such as cell phones.
Oil imports fell.
Exports fell 3.6% last month to $249 billion. The U.S. shipped less oil and fewer pharmaceutical drugs.
Big picture: The key trend in trade since last fall has been a broad decline in imports from a record high. They peaked at $348 billion a year ago and haven’t come close to that level since then.
Americans are buying relatively fewer goods and spending more on services, for one thing. And a slower U.S. economy has also reduced demand.
The increase in imports in April is unlikely to lead to a sustained reversal in those trends. High inflation and rising U.S. interest rates have dampened demand for consumer goods.
Looking ahead: “Trade was neutral for U.S. economic growth in the prior quarter but will likely be modestly negative for growth in the current quarter,” said senior economist Abbey Omodunbi of PNC Financial Services.
Market reaction: The Dow Jones Industrial Average
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and S&P 500
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rose in Wednesday trades.[ad_2]
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U.S. trade deficit in goods leaps 17% as exports retreat
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The numbers: The trade deficit in goods shot up 17% in April to a six-month high of $96.8 billion, reflecting a rebound in imports and a broad decline in American exports.
The trade gap in goods rose from $82.7 billion in March, the Census Bureau said.
Larger deficits subtract from gross domestic product, the official scorecard for the economy.
An advanced estimate of wholesale inventories, meanwhile, showed a 0.2% decline in April. Retail inventories rose 0.2% in the month, according to an early estimate.
Higher inventories add to GDP, but the mixed results suggest little impact.
Key details: Exports dropped 5.5% to $163.3 billion. U.S. companies shipped fewer cars, food, consumer goods, oil and other industrial supplies.
Imports of goods rose 1.8% to $260 billion in April, mostly because of higher oil prices and strong demand among consumers for new cars and trucks.
Big picture: The rebound in imports suggests more capacity for consumers to spend. Car sales this year have been particularly strong as more models become available and dealers offer more discounts.
Auto sales fell last year to the lowest level in 11 years owing to a shortage of vehicles and record prices.
The slowdown in inventory growth, however, indicates businesses are unsure about future demand. They are hedging their bets and don’t want to get caught with excess inventory like they did last year.
Market reaction: The Dow Jones Industrial Average
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and S&P 500
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rose in Friday trades.[ad_2]
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U.S. trade deficit hits 4-month high in sign of stress on the economy
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The trade deficit widened 2.7% in February to a four-month high of $70.5 billion and pointed to more stress on the U.S. economy.
The trade gap rose from $68.7 billion in January and was slightly above Wall Street forecasts.
Both imports and exports fell in February, reflecting weaker growth in the U.S. and abroad.
Key details: Imports fell 1.5% to $321.7 billion in February to extend a recent string of declines, the government’s trade report showed.
Part of the drop reflects lower oil prices, but Americans have also trimmed spending in response to rising interest rates and a slower economy
In February, imports of cell phones, consumer goods, clothing and drugs retreated.
A further decline in imports would be a potential warning sign of worse to come. They have declined 8% since peaking in March 2021.
Exports slid a sharper 2.7% to $251.2 billion and also continued a recent downtrend. Just seven months ago they touched a record high.
A weaker global economy could further sap demand for American goods and services.
In February, exports of industrial supplies, autos and parts, consumer goods and passenger planes all declined.
Big picture: The U.S. is on track to break a string of three straight years of rising and record deficits, but not for reasons conducive to a healthy economy.
Looking ahead: “The sharp declines in both exports and imports in February add to the signs that economic growth is faltering,” said deputy chief U.S. economist Andrew Hunter of Capital Economics.
Market reaction: The Dow Jones Industrial Average
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and S&P 500
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were set to open slightly lower in Wednesday trades.[ad_2]
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GDP set to turn positive again due to shrinking U.S. trade deficit and end ‘rule-of-thumb’ recession
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The numbers: The U.S. international trade deficit fell in August to a 15-month low of $67.4 billion, paving the way for a resumption of growth in gross domestic product in the third quarter.
The deficit narrowed 4.3% from $70.5 billion in July, the government said Wednesday. It was the fifth decline in a row.
Economists polled by The Wall Street Journal had forecast a deficit of $67.7 billion.
GDP contracted in the first two quarters, meeting an old rule-of-thumb for when an economy is in recession.
The group of prominent economists that makes the official declaration, however, uses a broader definition that suggests the economy has avoided a recession.
Big picture: The U.S. trade deficit has tumbled since peaking at a record $106.9 billion in March. Exports have risen and imports have declined, particularly because of falling oil prices.
Lower trade deficits add to GDP, the official scorecard of the economy. The shrinking trade gap is set to add a whopping 3 points to third-quarter GDP, according to estimates from S&P Global Market Intelligence.
That’s the mirror opposite of what happened in the first quarter, when the record trade gap caused GDP to turn negative for the first time since early in the pandemic.
The result: GDP is set to rise for the first time in three quarters, ending at least for now any talk that the U.S. is already in recession.
Which way the trade deficit trends in the months ahead is less clear. A strong dollar is hurting U.S. exporters while a slowing economy could force Americans to reduce spending on imports even though they are cheaper to buy.
Ditto for the economy. While it’s still growing, the pace of expansion is expected to slow as the Federal Reserve jacks up interest rates to try to tame high inflation.
Key details: Exports slipped 0.3% in August to a $258.9 billion, but it’s still the second highest level on record.
Imports dropped 1.1% to $326.3 billion, marking the lowest level since early 2021.
Looking ahead: “The further sharp decline in the trade deficit… means that net exports provided a big boost to third-quarter GDP growth,” said senior U.S. economist Andrew Hunter at Capital Economics. “But the twin drags from the surging dollar and the deteriorating global economy suggest that strength will fade soon.”
Market reaction: The Dow Jones Industrial Average
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and S&P 500
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sank in Wednesday trades following a two-day rally.[ad_2]
