The Bureau of Economic Analysis and the Census Bureau reported that the U.S. trade deficit was $44.2 billion in August, an increase from the $42.5 billion observed in July. The widening of the overall deficit was mostly attributable to a drop in goods exports that was larger than the decline in goods imports.
Goods exports decreased from $130.7 billion to $128.5 billion; meanwhile, goods imports fell from $188.5 billion to $187.8 billion. The bottom line is that slowing global growth is sapping trade activity, both for exports and imports.
A fair share of the credit for the widening of the trade deficit can be given to the petroleum sector, most likely due to higher per barrel costs. The petroleum trade balance grew from $21.0 billion in July to $23.5 billion in August. Petroleum exports decreased by $840 million in August and petroleum imports rose by $1.6 billion. The non-petroleum trade balance actually narrowed from $36.3 billion to $35.3 billion with both lower export and import activity. In other words, the widening of the overall trade deficit was the result of trade shifts in the petroleum market.
Looking specifically at major categories, total goods exports were lower for the month. The largest declines were seen in industrial supplies and materials (down $1.2 billion); foods, feeds, and beverages (down $1.1 billion); consumer goods (down $422 million); and automotive vehicles and parts (down $87 million). In contrast, non-automotive capital goods exports rose $382 billion.
The goods imports picture was mixed. Increased goods imports were observed in the industrial supplies and materials (up $1.5 billion) and foods, feeds, and beverages (up $79 million) sectors. However, the consumer goods (down $1.2 billion), motor vehicles (down $773 million), and non-automotive capital goods (down $507 million) sectors were weaker.
The positive news is that manufactured goods exports were higher in August, up from $80.9 billion to $86.1 billion (not seasonally adjusted). This data has been highly volatile in the past couple months, as it was $89.4 billion in June. Therefore, the more important figure to look at would be the year-to-date figure. There have been $680.4 billion in manufactured goods exports in the first eight months of 2012, which is $43.6 billion more than in the same time period in 2011. Even with so many headwinds facing the industry, export growth has been positive, albeit significantly below the pace of the previous two years.
This same volatility can be seen in the country-by-country statistics. Last month, there were declines in goods exports across-the-board. This month, it is the opposite, with improvements in goods exports to Europe, the Pacific Rim, North America, and South America. Still, the effects of the global slowdown are evident. Year-to-date exports to Europe were $27.7 billion in 2011; in 2012, that figure is $26.1 billion with declines among our largest trading partners. Counterbalancing this decline is modest growth in goods exports in some regions. This includes YTD increases between 2011 and 2012 in such countries as up China (up $187 million), Japan (up $861 million), and Mexico (up $1.4 billion).
Chad Moutray is chief economist, National Association of Manufacturers.
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