Written by Steven Hansen
The May import and export container counts are showing a slowing USA and global economy – and a worsening trade balance.
Analyst Opinion of Container Movements
January was great. February was bad. March was good. April is ok. May is a mixed bag.
Simply looking at this month versus last month – the growth rates slowed for both exports and imports. Imports did grow year-over-year but exports contracted.
Looking at the three month rolling averages this month may be misleading as Febuary and March data were screwed up – and one really needs to average these two months [February was terrible for imports and fantastic for exports – March was the opposite]. The data is too noisy to only look at one month – maybe the year-to-date is the best metric this month [and it shows moderate deceleration in imports and a SIGNIFICANT deceleration in exports].
In general, there is bad news that both imports and exports are slowing – but as exports are slowing much faster than imports, the trade balance will worsen.
Using this data to forecast the USA economy, the indications are at this point of a continued weak consumption.
This data set is based on the Ports of LA and Long Beach which account for much (approximately 40%) of the container movement into and out of the United States – and these two ports report their data significantly earlier than other USA ports. Most of the manufactured goods move between countries in sea containers (except larger rolling items such as automobiles). This pulse point is an early indicator of the health of the economy.
Consider that imports final sales are added to GDP usually several months after import – while the import cost itself is subtracted from GDP in the month of import. Export final sales occur around the date of export. Container counts do not include bulk commodities such as oil or autos which are not shipped in containers. For this month:
| Acceleration Month-over-Month | Change from One Year Ago | Year to Date vs. Previous Year | Acceleration 3 Month Rolling Average | 3 Month Rolling Average vs. Average One Year Ago | |
| Imports | -9.2 % | +2.5 % | +5.3 % | +7.4 % | +11.8 % |
| Exports | -10.6 % | -4.0 % | +0.9 % | -2.4% | +3.7 % |
As the data is very noisy – the best way to look at this data normally is the 3 month rolling averages. There is a direct linkage between imports and USA economic activity – and the change in growth in imports foretells real change in economic growth. Export growth is an indicator of competitiveness and global economic growth.
There is reasonable correlation between the container counts and the US Census trade data also being analyzed by Econintersect. But trade data lags several months after the more timely container counts.
Econintersect considers import and exports significant elements in determining economic health (please see caveats below). recession levels.
Containers come in many sizes so a uniform method involves expressing the volume of containers in TEU, the volume of a standard 20 foot long sea container. Thus a standard 40 foot container would be 2 TEU.
There is a good correlation between container counts and trade data (the US Census trade data is shown on the graph below). Using container counts gives a two month advance window on trade data.
Inflation Adjusted Year-over-Year Change Imports (blue line) and Exports (red line)
Transport sector growth in general is trending up.
Caveats on the Use of Container Counts
These are extraordinary times with historical data confused by a massive depression and significant monetary and fiscal intervention by government. Further containers are a relatively new technology and had a 14 year continuous growth streak from 1993 to 2006. There is not enough history to make any associations with economic growth – and we must assume a correlation exists.
Further, it is impossible from this data to understand commodity or goods breakdown (e.g. what is the contents in the containers). Any expansion or contraction cannot be analyzed to understand causation.
Imports are a particularly good tool to view the Main Street economy. Imports overreact to economic changes much like a double ETF making movements easy to see.
Contracting imports historically is a recession marker, as consumers and businesses start to hunker down. Main Street and Wall Street are not necessarily in phase and imports can reflect the direction for Main Street when Wall Street may be saying something different. During some recessions, consumers and businesses hunkered down before the Wall Street recession hit – and in the 2007 recession the contraction began 10 months into the recession.
Above graph with current data (below):
Imports of Goods and Services
Econintersect determines the month-over-month change by subtracting the current month’s year-over-year change from the previous month’s year-over-year change. This is the best of the bad options available to determine month-over-month trends – as the preferred methodology would be to use multi-year data (but the New Normal effects and the Great Recession distort historical data).
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