Trade Balance in July 2010 May Be Down (or Up)

According to the release for international trade in goods and services for July 2010:

… total July exports of $153.3 billion and imports of $196.1 billion resulted in a goods and services deficit of $42.8 billion, down from $49.8 billion in June, revised. July exports were $2.8 billion more than June exports of $150.6 billion. July imports were $4.2 billion less than June imports of $200.3 billion. 

In July, the goods deficit decreased $7.0 billion from June to $55.2 billion, and the services surplus was virtually unchanged at $12.5 billion.  

A general review of the backup data shows no anomalies. But there is adisconnect between the adjusted and non-adjusted data. The bottom line is that US Census is struggling with seasonal adjustment factors. The prima facie evidence is the choppy MoM trade balance graph above – view the three month moving average.

Good seasonal adjustment factors do not produce this kind of chop.

A review of the unadjusted goods data for imports demonstrates why the US Census is having problems with seasonal adjustment factors – the seasonality of the data is inconsistent. The data has seasonal characteristics, but not enough of a characteristic to provide a precise answer on the MoM change.


The best we can say is that the current trend lines of growing trade balance remains intact, however its rate of growth may have changed. This view is subject to review when next month’s data is released.

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