The February trade data released today by the Commerce Department showed manufactured goods exports significantly outperformed other sectors.
Overall U.S. exports of goods and services rose 9.3 percent over February 2011, considerably slower than the 15 percent annual rate needed to achieve the goal of doubling exports in five years. Manufactured goods exports, however, were up 14.9 percent, on path to meet the goal. Services exports were up 10 percent. The drag on exports came from farm products of which February exports were 4 percent lower than in February 2011.
Manufactured goods exports dominated the year-over-year gain in exports, accounting for $12 billion of the total $16 billion gain in exports of goods and services.
Imports of manufactured goods in February rose less than exports, up 9.6 percent from the year-earlier month. As a consequence, the manufactured goods trade deficit improved marginally, from $32.8 billion in February 2011 to $31.5 billion this February.
Considering the year-to-date figures, i.e., January and February compared to the same two months of last year, manufactured goods exports are below the 15 percent path to double in five years – being up 11.4 percent. However, if the February figures are not an anomaly, this augurs well for continued growth.
Exports are very important to manufacturers, as the domestic market is growing modestly and faster growth requires greater sales to faster-growing export markets.
While the dollar is at a competitive rate, a concern is the economic slowdown in some major markets for U.S. exports – particularly the European Union. January exports to that market were up only 4 percent from the prior year. However, February exports were up 13 percent, giving some cheer.
Both exports and imports with China grew slowly – each up only about 3 percent over last February. But because imports from China are so much larger than exports, exports have to grow at a faster percent in order to bring the deficit down. That was not the case in February, and the February deficit with China was $9 billion larger than a year ago, at a seasonally-adjusted annual rate.
Frank Vargo is vice president for international economic affairs, National Association of Manufacturers.