US net trade to rebound in Q2

Net trade was a substantial drag on US growth in Q1. However, net trade is expected to rebound. export growth is improving and the imports that surged in Q1 by 7.1% are expected to rise as well.

This pattern is largely due to the resolution of the West Coast port strike in mid-February. The resolution to the strike and its subsequent effect on container traffic spilled over the quarter-end, leading to a surge in imports at the end of Q1 and a rebound in exports early in Q2. 

Accounting for the distortions to the data from the port strike, the signal from trade continues to be one of US dollar strength and weak external demand.

According to Barclays,

• Net trade, is expected to rebound and add 0.2pp to growth in Q2.
  
  
• Export growth should rebound from its 5.9% decline in Q1 and grow by 4.5% in Q2.
  
  
• Imports are expected to rise by a modest 2.5% in Q2.
  
  
• Public consumption and investment is expected to rise by 1.5% on the quarter.

For calendar year 2015, our outlook suggests net trade will drag growth lower by 0.6pp, in line with what historical episodes of US dollar appreciation would suggest.