U.S. seaborne imports climbed 6% on a year earlier in July, breaching one million shipments for only the second time (the previous being August 2016), Panjiva data shows. Tariff-sensitive sectors continued to lead the way, with automotive industry imports rising 20% (despite a slide in sales) while steel saw a 10% increase. The latter comes as the administration of President Trump ponders action resulting from its section 232 review of the industry. Among consumer-led sectors apparel saw a rare upturn, improving 1% on a year earlier. Vietnam’s ascent as a manufacturing powerhouse continued, with shipments jumping 28% on a year earlier. It is likely to be a target of the administration’s overdue “Omnibus report” on the causes of the deficit. Similarly, imports from China climbed 10%. On the basis of year-to-date performance, the “peak season” may look similar to last year, and total imports may rise 3% in 2017 vs. 2016.

 

U.S. seaborne import shipments climbed 5.7% on a year earlier in July, Panjiva data shows, breaching the 1 million shipment mark for only the second time (previous being August 2016) ever. That also marks the 11th year-over-year increase in the past 12 months. The increase shouldn’t be a surprise – American managers’ import expectations have reached their highest since November 2014, as outlined in Panjiva research of August 1.

Chart shows total U.S. seaborne shipments. Note data is provisional due to late reporting shippers Source: Panjiva

While that would suggest few concerns about increased tariffs or protectionist measures in the very near term, there is still significant import growth in tariff-sensitive sectors. Imports in the automotive industry remaining startling, with a 19.8% growth in shipments coming despite a steady slide in auto sales. Iron and steel shipments also continued to expand, rising 9.8%. That was the fifth straight monthly increase, and comes as the administration of President Donald Trump continues to consider the results of the section 232 review of the industry.

Retailers may be relying on stronger consumer spending broadly, reflecting consumer confidence reaching a 16 year high according to the Conference Board survey. Imports of consumer durables are improving, as evidenced by a 15.1% increase in furniture imports to the second highest ever. Notably imports of apparel increased by 1.3% following a protracted downturn. Less positively the first month of the pre-holiday season toy imports was down 12.4%.

Data for shipments segmented by HS code for furnishings (HS 9401/3), autos and parts (8703/8), apparel (61-64), toys (9504), steel (72,73) and oil (2709). Note data is provisional due to late reporting shippers. Source: Panjiva

Vietnam’s ascent as a manufacturing powerhouse was in evidence, with a 28.4% growth rate nearly doubling the prior month’s level. That brought it to an all-time high, and within 2% of India’s level, which itself climbed by a respectable 9.8% rate. We continue to see Vietnam as being at risk of being a target of the Omnibus report on the causes of the trade deficit, the results of which are now more than a month overdue.

Imports from Greater China meanwhile accounted for three quarters of the expansion in absolute terms with a 10.2% rise. That was faster than the U.S. total for seventh straight month (excluding lunar new year). If repeated in the dollar value of exports then increased friction between the two countries’ governments seems likely, especially if the U.S. government launches a section 301 review.

Chart segments U.S. imports by sea by country of origin. Bubble size indicates total shipments. Source: Panjiva

If the “shape” of imports so far this year can be taken as a guide to how the peak season may look, then this year so far looks no different to prior years. The real proof will come in August and September data. As well as simply covering more of the year, they will also show how much of last year’s “flattening” later in the peak season was due to Hanjin Shipping’s failure. On the basis of prior years 57.2% of full year shipments are complete by the end of July. that would suggest shipments in 2017 will be 3.1% higher than a year earlier, or 11.48 million shipments.

U.S. seaborne shipment data segmented by month Source: Panjiva