US trade recovery contingent on farm sales, autos supply chains

U.S. merchandise trade improved for a second month in December 2020, with exports and imports combined having increased by 1.8% year over year, Panjiva's analysis of official data shows. That followed a 1.8% increase in November 2020 but included a divergent performance in exports and imports. 

Total U.S. exports fell for a 12th straight month with a reduction of 2.6%. While that was an improvement from the 6.4% drop seen a month earlier, that was largely the result of a 30.7% surge in food and beverage exports. 

The improvement in food exports was driven for the most part by China's purchases of agricultural products under the phase one trade deal. It is perhaps not a surprise therefore that the Biden administration has chosen to not make any moves regarding the arrangement early in its term, as discussed in Panjiva's research of Jan. 15.

Imports of goods, meanwhile, actually experienced a slower rate of growth of 4.7% compared to 6.0% a month earlier. The reduced growth rate largely reflects a continued decline in industrial supplies, which fell by 4.6% due to depressed commodity prices, including oil, while imports of food and beverages slowed to 5.0% growth from 8.9%.

The automotive industry in the meantime saw an acceleration in the growth of both exports, to 3.2% from a decline of 7.1% a month earlier, and imports which climbed 10.0% in December 2020. At $46.5 billion of total trade that was the largest amount of bilateral trade since at least 2010. The growth largely reflects increased sales of vehicles in the U.S., exports outnumbered imports by 2.5:1 on a value basis. 

The bottleneck in semiconductor availability and resulting plant closures globally may remove a key growth driver for trade activity in January. The component shortage has not stopped trade activity in the sector, however, with imports of larger-scale parts by sea having increased by 12.2% year over year in the first two weeks of January, Panjiva's data shows.

Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.