Data Round-Up: Int'l Trade a Neutral Factor for 16Q2 GDP; Services Improving

posted by Michael Lewis on July 06, 2016

Found in US, categorized in Macro

Tags: FMI michael lewis May International Trade and June Non-Manufacturing Index

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Trade sector was likely a neutral factor in 16Q2 GDP. Brexit may be stumbling block near-term, but export prospects still looking up. US exports to China have picked up noticeably this spring. NMI 16Q2 clear improvement over 16Q1. Brexit not a disruption.


Today’s data, particularly the May trade report, was pre-Brexit. Nonetheless, these reports argue that the U.S. is well-positioned to ride out the storm in Europe (and FMI continues to expect that storm to settle down to the proverbial tempest in a British teapot). U.S. exports have been firming. ISM surveys, both manufacturing and non-manufacturing, showed that export orders improved noticeably last quarter. Brexit may present a stumbling block near-term, but we believe the export picture will show further improvement by year-end. For 16Q2, net exports are on track to be a neutral factor for real GDP. FMI is tracking almost +2.5% real growth for the quarter. We also note that the NMI June results completely erased the weakness in its May survey, including in jobs. While purchasing manager surveys have not been particularly good predictors of payroll gains in this cycle, we take this as a good omen that May’s jobs “nightmare” will also become a distant memory after Friday’s June employment report (FMI’s complete employment preview will be released Thursday, as usual).

About Michael Lewis

Michael Lewis

Mike Lewis founded Free Market Inc. (FMI) in 1982 as a full-service economic consulting firm, providing insights and in-depth data analysis primarily for institutional money managers and corporate planning directors.

FMI has compiled a solid record of timely, independent and accurate economic forecasts.  FMI blends its unique analysis of indicators and experience with economic cycles into a consistent overall outlook. They offer both a comprehensive overview and in-depth detail that enable clients to integrate FMI’s insights into their decision-making process.

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