The April U.S. foreign trade data released by the Department of Commerce today show some positive news for manufacturers. U.S. manufactured goods trade in April recorded a second favorable month in a row, with a strong increase in exports and a decline in the manufactured goods deficit. The important category of capital goods showed particularly strong export growth.
Manufactured goods exports in April stood at a seasonally-adjusted $97.2 billion, up 1.2 percent over March – an annual rate of increase of 16 percent. This continues the generally strong pattern of the last year, and April manufactured goods exports were 15 percent larger than in April 2010. Fifteen percent a year is what is needed to meet the goal of doubling exports in five years, so manufactured goods are still on that path.
Manufactured goods imports in April were $134 billion, down one percent from March. Part of the reason for the drop was a 19 percent one-month drop in imports from Japan, reflecting the results of the disruption caused by the tsunami and nuclear disasters that affected Japan.
The U.S. balance of trade in manufactured goods declined in April as a result of the stronger export growth and slight decline in imports. The seasonally-adjusted deficit of $36.8 billion was the lowest so far this year, but that deficit implies an annual rate of $442 billion.
Capital goods exports excelled in April, growing 3.1 percent from March, to $41 billion. This growth propelled U.S. capital goods exports to a new record, breaking the previous record of April 2008 and indicating an end to the capital goods export recession of the last two years. (See graph below.)
Capital goods are more than 40 percent of all manufactured goods exports, so growth in this category is essential to the U.S. trade position. This growth is impressive because the major category of commercial aircraft showed virtually no growth for the month. Leading the capital goods surge were computers, telecommunications equipment, excavating machinery, industrial engines, and oil and gas field equipment.
Export growth was stronger in the more price-sensitive product areas, indicating that the competitive value of the dollar is having a positive effect on U.S. exports.
As has been the case all year, the brightest part of the U.S. manufactured goods trade picture continued to be trade with our trade agreement partners. The latest data show that manufactured goods exports to the 17 U.S. trade agreement partners (including those in CAFTA and NAFTA) have increased at an 18 percent annual rate so far this year, compared to a 14 percent rise in exports to countries that do not have trade agreements with the United States.
The U.S. manufactured goods trade balance with trade agreement partners showed a growing surplus – running at an annual rate of $36 billion so far this year, compared to the $21 billion surplus in full year 2010. If this trend continues, 2011 will mark the fourth straight year of a U.S. manufactured goods surplus with trade agreement partners.
In all today’s report is positive news after several weeks of negative reports showing that manufacturing has cooled.
Frank Vargo is vice president for international economic affairs, National Association of Manufacturers.
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