The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit edged down somewhat, down from $45.73 billion in November to $44.26 billion in December. For the year as a whole, the monthly data in 2016 were quite volatile, ranging from $36.52 billion in September to $45.73 billion in November. In 2016, the trade deficit averaged $41.85 billion, which was not far from the $41.70 billion average seen in 2015. The trade deficit was lower in December because the increase in goods exports (up from $122.14 billion to $126.93 billion) was enough to offset the gain in goods imports (up from $189.06 billion to $192.64 billion). The jump in both figures was important, suggesting that global trade is picking up; indeed, goods exports and imports were at their highest levels since July and March 2015, respectively. In addition, the service sector surplus inched up from $21.19 billion to $21.44 billion..
Looking more closely at the underlying data, goods exports were mostly higher. The largest increases were seen in the capital goods (up $3.33 billion) and industrial supplies and materials (up $731 million) segments, with the capital goods category boosted by a $1.01 billion gain in civilian aircraft exports. At the same time, goods imports were also up across-the-board. This included strong increases for automotive vehicles and parts (up $1.62 billion), industrial supplies and materials (up $1.09 billion) and capital goods (up $982 million).
Despite some improvements in December, the bottom line is that manufacturers struggled mightily over the past two years to increase international demand, particularly with a strong U.S. dollar and lingering economic challenges to key markets. Using non-seasonally adjusted data, U.S.-manufactured goods exports totaled $1,051.27 billion year-to-date in December, down 5.43 percent from $1,111.61 billion in December 2015.
Moreover, exports were lower in five of the top six markets for U.S.-manufactured goods in 2016, including Canada (down from $280.61 billion to $266.83 billion), Mexico (down from $235.75 billion to $230.96 billion), China (down from $116.07 billion to $115.78 billion), the United Kingdom (down from $56.12 billion to $55.40 billion) and Germany (down from $49.97 billion to $49.36 billion). The lone exception was Japan (up from $62.44 billion to $63.26 billion), which eked out a small gain for the year.
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