Thursday, 16 December 2004

US trade and capital data for October

The US trade deficit grew 8.9 percent in October to a record US$55.5 billion. Excerpt of the report:

U.S. International Trade in Goods and Services
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total October exports of $98.1 billion and imports of $153.5 billion resulted in a goods and services deficit of $55.5 billion, compared with $50.9 billion in September, revised. October exports were $0.6 billion more than September exports of $97.5 billion. October imports were $5.1 billion more than September imports of $148.4 billion... Deficits were recorded, in billions of dollars, with China $16.8 ($15.5), the European Union (25) $9.3 ($7.7), OPEC $7.2 ($6.7), Japan $5.9 ($6.1)...

In the meantime, foreigners continued to buy US financial assets, but at a decreasing pace. Excerpt from the US Treasury Department press release:

Treasury International Capital (TIC) Data For October
Gross purchases of domestic securities by foreigners were $1,222.7 billion in October, exceeding gross sales of domestic securities by foreigners of $1,159.4 billion during the same month. Foreign purchases of domestic securities reached $63.3 billion on a net basis in October, relative to $64.7 billion during the previous month. Private net flows reached $49.1 billion in October. Official net purchases of U.S. securities were $14.2 billion in October, relative to $13.0 billion in September... Net foreign purchases of both domestic and foreign long-term securities from U.S. residents were $48.1 billion in October compared with $67.5 billion in September.

Note that the US$48.1 billion of net foreign purchases of US assets is the lowest in a year. It is also lower than the current account deficit in the first two quarters of the year as well as the trade deficit for October. This obviously is not sustainable.

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