Trade balance / ISM Manufacturing - Nomura

Analysts at Nomura offered their breakdown of the US key events.

Key Quotes:

Trade balance: The trade deficit rose to $48.7bn in October, slightly higher than expectations (Nomura: $46.4bn, Consensus: $47.5bn), driven by an increase in the goods trade deficit. 

Consistent with the advanced goods trade balance report, food & beverage goods exports declined sharply by 11.2% m-o-m, widening the goods trade deficit. 

Almost all of the decrease in food & beverage exports can be attributed to a sharp 45.7% decline in soybean exports. This series exhibits an unusual seasonal pattern and the large deviation could imply some payback for November’s trade data. However, exports of capital goods, autos and consumer goods also showed modest declines. 

Overall, goods exports fell 0.2% m-o-m in October while imports rose 1.8% m-o-m. 

ISM non-manufacturing: The ISM nonmanufacturing index declined 2.7pp to 57.4 in November, slightly more than expectations (Nomura: 58.6, Consensus: 59.0), but remains firmly within expansionary territory, indicating sustained momentum in the nonmanufacturing sector albeit at a slightly slower pace. 

Part of the decline in the headline index can be attributed to some moderation in the supplier deliveries index, which was temporarily elevated due to supply chain disruptions after the recent inclement weather.