The advance report on international trade in goods-only put exports up 0.7% after two months of declines, and imports down 1.3% and lower for a third month in a row. The trade deficit for goods only was $63.2 billion, the lowest since $62.0 in October 2016. The mild increase in the value of exports to $136.4 billion should not disguise that the monthly total is still among the lower readings of 2019 and exports have lost momentum since 2018. Declines in imported goods are probably due to caution ahead of possible resolution of some trade and tariff negotiations — which in fact had progress in early December and may be visible in that data when reported.
In any case, the full international trade report for November at 8:30 ET on Tuesday, January 7 may paint a slightly different picture with the inclusion of trade in services. In the mean time, it suggests that there will be less drag from net exports for fourth quarter GDP when the advance estimate is released at 8:30 ET on Thursday, January 30.
Advance data on inventories in November for retailers and wholesalers suggest that the change in the value of private inventories will be a negative contribution to fourth quarter GDP. For October and November, wholesale inventories have been flat. Retail inventories more than erased a 0.1% increase in October with a sharp 0.7% drop in November. That may be good news for retailers where it means stocks were drawn down early in the holiday shopping period and there will be less to discount to move in December or to get rid of in January. Now it remains to be seen if restocking is going to be aggressive or tame in anticipation of consumers being satiated with spending over the holidays. The preliminary numbers for manufacturing inventories will be reported with the full factory orders report for November at 10:00 ET on Tuesday, January 7. However, weak conditions for the factory sector do not suggest that manufacturers are going to be adding stocks more than absolutely necessary for the time being.
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