U.S. Trade Deficit Edged Down Somewhat in December

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.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM), where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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