Tag: Bureau of Economic Analysis

Trade Deficit Widened in September, with Manufactured Goods Exports Still Weak in 2013

The Census Bureau and the Bureau of Economic Analysis said that the U.S. trade deficit widened from $38.7 billion in August to $41.8 billion in September. This was largely the result of higher goods imports, up from $190.6 billion to $193.4 billion. Goods exports were essentially unchanged, down from $132.3 billion to $132.1 billion.

Petroleum accounted for less than one-third of the shift in the trade balance in September. Petroleum imports increased from $30.9 billion to $31.7 billion, with exports down from $12.2 billion to $11.8 billion. The result was a widening of the petroleum trade deficit from $18.6 billion to $19.8 billion. At the same time, the non-petroleum trade deficit expanded from $38.5 billion to $40.5 billion.

Looking specifically at goods exports, the largest increase in September came from foods, feeds and beverages (up $1.4 billion), with almost all of that gain stemming from soybean exports. Other major export categories were all lower. This included industrial supplies and materials (down $1.3 billion), consumer goods (down $202 million), non-automotive capital goods (down $97 million), and motor vehicles and parts (down $7 million).

Unfortunately, growth in manufactured goods exports remain frustratingly slow, a trend that we have seen all year. There were $883.1 billion in manufactured goods exports through the first nine months of 2013, up only 1.5 percent over the $869.7 billion in the same time period in 2012. This news continues to be disappointing, especially relative to the 5.7 percent growth rate experienced in all of 2012 and the 15 percent rate required to meet the President’s goal of doubling exports by 2015.

Reduced exports to the European Union account for much of the current weaknesses in  these trade figures. Year-to-date goods exports to the EU have fallen from $200.7 billion   from January to September 2012 to $195.4 billion in the same time frame in 2013, with data that is not seasonally adjusted. It is noteworthy that the pace of decline has fallen as the year has progressed and Europe’s woes have begun to stabilize, and yet, they still remain lower.

The positive news was that our goods exports to our three largest trading partners year-to-date was higher this year, albeit only modestly so. Our goods exports to Canada (up from $219.9 billion to $224.4 billion), Mexico (up from $160.3 billion to $167.5 billion), and China (up from $78.8 billion to $82.7 billion) were higher this year through September.

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Increased Imports Widens the Trade Deficit in November

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit widened from $42.1 billion in October to $48.7 billion in November. This was the second consecutive month to see a widening, and it was the largest deficit since April. While both exports and imports were higher in November, the principal driver of the larger deficit was the increase in goods imports. Goods imports rose from $186.8 billion to $195.0 billion, or an increase of 4.4 percent. Meanwhile, goods exports were up just 1.3 percent from $127.7 billion to $129.3 billion.

With lower petroleum per barrel costs, the main driver of the widening trade deficit was non-petroleum factors. In fact, the petroleum trade balance narrowed from $24.6 billion to $23.5 billion on less oil imports. On the other hand, the non-petroleum goods trade balance widened from $33.8 billion to $41.5 billion, its highest level ever.

Looking specifically at goods exports, they were mostly higher, albeit with slow growth (especially relative to imports). These included capital goods, except automotive (up $937 million), automotive vehicles and parts (up $743 million), industrial supplies and materials (up $577 million), and consumer goods (up $65 million). The one major sector with declining exports in the month was foods, feeds, and beverages (down $355 million).

These numbers were more than outweighed, though, by the increases in good imports in the following sectors: consumer goods (up $4.6 billion), automotive vehicles and parts (up $1.5 billion), industrial supplies and materials (up $1.3 billion), foods, feeds, and beverages (up $555 million), and non-automotive capital goods (up $408 million).

Reflecting this slower growth for international sales, manufactured goods exports dropped from $85.9 billion to $83.5 billion, using non-seasonally adjusted data. Despite this drop, year-to-date exports for manufactured goods are up 5.2 percent in 2012 relative to the level seen during the same time period in 2011. This suggests that U.S. businesses continue to find opportunities overseas, even as the pace of growth has obviously slowed with numerous headwinds in international economies.

Chad Moutray is the chief economist, National Association of Manufacturers.

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Real GDP Revised Up to 1.7 Percent in the Second Quarter

The Bureau of Economic Analysis said that real gross domestic product (GDP) increased 1.7 percent in the second quarter, up from its earlier estimate of 1.5 percent. The uptick was largely due to larger contributions from service-sector consumption and fixed investments.

At the same time, there were also some figures that were lower than originally stated, including nondurable goods consumption and inventory accumulation. The latter had been a net positive, but has now shifted to being a drag on overall output growth.

The big story as it relates to manufacturing is that activity slowed to a near-crawl. In the first quarter, the consumption of goods contributed 1.11 of the 2 percent growth in real GDP, or 55.5 percent of the total. The consumption of durable goods – particular in motor vehicles – represented 0.85 percent of this, and as such, they helped to propel the economy forward.

In the second quarter, though, there was no contribution from durable goods consumption, with reduced motor vehicle and furnishings spending. Nondurable goods purchases also fell between the quarters, with the net contribution dropping from 0.26 percent to 0.09 percent. The main driver of the positive growth for nondurables was petroleum spending.  Regarding the revision, the durables had been a drag in the earlier estimate, so today’s figures are an improvement, albeit one that moves the sector to neutral; whereas, the nondurables spending contribution was revised slightly lower. (continue reading…)

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Consumers Decrease Spending in May

The Bureau of Economic Analysis reported that consumer spending slightly in May, its first decrease since November. Looking specifically at manufactured goods, durable goods expenditures declined from $3,792.0 billion in April to $3,765.8 billion in May. Likewise, nondurable goods spending fell from $1,222.5 billion to $1,217.9 billion. It was the third consecutive monthly decline for both. Overall personal consumption remains 3.5 percent higher than it was on May 2011, however.

Meanwhile, personal income increased by 0.2 percent, which is the same rate as observed in April. Manufacturing wages and salaries fell, though, declining from $717.5 billion to $713.0 billion. This is essentially the level observed in January, so the gains since then were wiped out. Given recent weaknesses in the manufacturing sector, though, it is not surprising.

Consumers have benefited from lower energy costs. The price index related to personal consumption expenditures declined 0.2 percent in May, with year-over-year gains down to 1.5 percent. Just six months ago, the year-over-year increase was 2.7 percent. Since then, petroleum costs soared and then declined significantly.

Breaking the price index down by sector, durable goods prices have declined by 1.2 percent, nondurables rose by 1.3 percent, and services increased by 2 percent over the past year. Energy costs are now 3.8 percent below where they stood last year.

Chad Moutray is chief economist, National Association of Manufacturers.

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Reduced Exports, Imports Narrow the Trade Deficit in April

The Bureau of Economic Analysis and the Census Bureau reported that the U.S. trade deficit narrowed from $52.6 billion in March to $50.1 billion in April. Both exports and imports declined, with imports falling by more. The longer-term trend for exports and imports are higher, with April’s levels for both higher than what was observed in February.

This same trend can be found among goods exports, with the March figures a bit of an outlier. The goods trade balanced narrowed to -$64.8 billion in April, down from -$67.5 billion. Some areas of strength for the month were found in foods, feeds and beverages (up $700 million), automobiles and parts (up $424 million) and consumer goods (up $210 million). These were offset, however, by declines in industrial supplies and materials (down $1 billion) and capital goods, excluding autos (down $1.45 billion). Petroleum exports rose from $10.3 billion to $10.5 billion, helping to reduce the petroleum trade deficit to $28.0 billion.

 

Of course, one of the ongoing storylines has been the economic challenges in Europe and a slowing of global growth overall. This can clearly be seen in these figures. Looking at data which is not seasonally adjusted, the declines in goods exports appear to be widespread. Goods exports to Europe, for instance, declined from $31.6 billion in March to $27.5 billion in April. This time last year, that figure was $36.9 billion, reflecting a significant slowing in activity. Export decreases were also observed in China, North America and South America, but not to such a great extent. The monthly trade deficit with China widened to $24.5 billion, up from $21.7 billion the previous month, as a result of increased imports and fewer exports.

Manufactured goods exports decreased in April, mirroring the larger trends. With that said, exports from manufacturers have generally drifted higher when you look at a longer time horizon. Year-to-date manufactured goods exports are $336.6 billion (not seasonally adjusted), up from $311.1 billion year-to-date in 2011. The primary drivers of this growth have been industrial supplies and materials and capital goods, with positive contributions from motor vehicles and consumer goods.

 

With that said, slowing international sales are a concern for many manufacturers. Anxieties about the future of Europe and an easing of growth in Asia and South America present challenges for export growth moving forward. Given the importance of trade to manufacturers’ growth strategies, it will be important for us to get the global economy moving again.

Chad Moutray is chief economist, National Association of Manufacturers.

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First Quarter Real GDP Downgraded to 1.9 Percent

The Bureau of Economic Analysis revised real GDP growth in the first quarter from 2.2 percent to 1.9 percent, as originally reported. The lower estimate resulted from slower inventory and nonresidential fixed investment, as well as faster import growth.

Consumers continue to be the main driver of economic growth. The consumption of goods, for instance, added 1.44 percentage points to the 1.9 percent of growth in real GDP. Of that number, durable goods added 1.05 percentage points, while nondurables contributed 0.38 percent. As such, manufacturing played a vital role in overall growth, especially in the motor vehicle sector.

Other areas of strength included fixed investment (both residential and nonresidential). Drags on the economy stem primarily from imports and government spending. On balance, international trade has a negative contribution, with import growth outpacing exports. Meanwhile, government reductions at both the federal as well as state and local levels reduced real GDP by 0.8 percentage points.

Overall, these numbers reflect slower growth in the first quarter than observed at the end of 2011, when real GDP increased by 3 percent in the fourth quarter. Much of the deceleration between the two quarters can be explained by larger-than-normal inventory accumulation in the fourth quarter. For 2012, I continue to forecast modest real GDP growth of 2.5 percent, with the current quarter up just over 2 percent.

Chad Moutray is chief economist, National Association of Manufacturers.

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Exports Lower on Slowing Global Growth in January

The Bureau of Economic Analysis and the Census Bureau reported that the U.S. trade deficit grew from $50.4 billion in December to $52.6 billion in January. Americans imported $233.4 billion in goods and services for the month (up from $228.7 billion the previous month) and exported $180.8 billion (up from $178.2 billion). This was the third consecutive month of a widening trade deficit, and the highest that it has been since October 2008.

A widening of the deficit for petroleum was the largest factor behind this month’s higher overall deficit. Exports of petroleum dropped from $10.6 billion to $9.4 billion; at the same time, imports grew from $37.8 billion to $39.1 billion.

The trade deficit for goods widened in the month, while there was a modest improvement in the services sector. The value of U.S. manufactured goods exported in January was $77.2 billion, down from $83.0 in December. Despite the decline, exports are still up overall from the $70.8 billion registered in January 2011.

Among goods exports, areas of strength included capital goods excluding automotive (up $1.3 billion), automotive vehicles and parts (up $1.05 billion) and foods, feeds and beverages (up $97 million). Declining exports were found among industrial supplies (down $295 million), consumer goods (down $215 million) and other goods (down $548 million). Meanwhile, the largest increases among goods imports were found in automotive vehicles (up $2.4 billion), industrial supplies (up $1.1 billion) and foods, feeds and beverages (up $437 million).

One of the things that definitely stands out with these numbers is the impact of slowing global growth. This is clear with both Europe (with exports falling from $27.2 billion to $24.5 billion) and China (down from $10.1 billion to $8.1 billion). Europe is currently in a recession, and China just announced slower growth targets for this year.

Overall, these figures show that exports have slowed recently due to weaknesses in the global economy. With import growth outstripping export growth, our trade balance has widened. For manufacturers – which contribute 60 percent of our total exports – it will be important for us to regain our footing by selling more of our goods overseas.

This, of course, will hinge on faster growth around the world, but it will also depend heavily on adding new markets and exploring new opportunities abroad. For this, policymakers can be helpful. Among their top priorities: getting the Export-Import Bank reauthorized. Beyond that, Washington should work to expand the number of trade agreements for greater access to new markets.

Chad Moutray is chief economist, National Association of Manufacturers.

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Weekly Economic Report – March 5

 Two narratives dominated last week’s economic discussion. First, as the Beige Book from the Federal Reserve Board stated, the economy “continued to increase at a modest to moderate pace in January and early February.” In his congressional testimony, Chairman Ben Bernanke was also quick to cite the important role that manufacturing has played in the recent rebound, with higher levels of activity reported in most areas of the country. Indeed, regional surveys from the Dallas and Richmond Federal Reserve Banks observed greater production activity and increased optimism for the next six months.

This upbeat assessment is shared by business economists at the National Association for Business Economics, who see a stronger outlook. Their consensus estimates for real GDP growth for this year and next are 2.4 percent and 2.8 percent, respectively. Adding to this sentiment, the Bureau of Economic Analysis (BEA) revised its estimates for fourth quarter 2011 growth up from 2.8 percent to 3 percent, led by increased consumer spending and business inventory accumulation. BEA also reported modest growth in personal income and spending for January, with strong gains in durable goods purchasing. Consumers, too, are more confident, according to the Conference Board, with their sentiments about the current and future economy at their highest level since this time last year.

In contrast to the more positive tone of many of these studies, the second narrative of last week focused on a series of indicators that unexpectedly declined. Most of us were anticipating growth for the Institute for Supply Management’s purchasing managers index, but it declined from 54.1 in January to 52.4 in February. This was led by a slower pace of growth for new orders, with production and employment also easing. Likewise, the Census Bureau reported reduced durable goods orders and construction spending in January.

In each of these cases, the longer-term trend remains a positive one and is in line with the first narrative. November and December figures were sharply higher, and so it might be expected to have some easing afterwards. Growth should resume in the coming months, especially as industrial production should grow around 4 percent this year. Even with that said, it is also clear that manufacturers are closely watching the events of Europe, once-again resurgent energy and raw material prices, and policy actions stemming from Washington. They remain cautious that one of these headwinds might derail growth, even with higher optimism overall.

This week, everyone will be focused on Friday’s jobs numbers. With 82,000 net new jobs created in the past two months, I anticipate continued improvements in employment for the sector, but perhaps not as large as were seen in November and December. Other key indicators of note include the release of revised productivity data on Wednesday and international trade findings on Friday.

Chad Moutray is chief economist, National Association of Manufacturers.

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Consumers Tightened Their Belts in June

The Bureau of Economic Analysis announced that personal income rose 0.1 percent in June, while personal spending fell 0.2 percent. The decline in personal consumption was the first since June 2010. Adjusted for inflation, real spending was unchanged. Nonetheless, it is clear that Americans are continuing to tighten their belts in light of rising prices and economic uncertainty.

Manufacturing wages and salaries fell 2.1 percent, in annual terms, between May and June. This was slightly less than the 2.6 percent decline for the population as a whole.

In terms of spending, the largest declines were in durables. It was the fourth straight month of decreasing durable goods sales, a reflection of some of the weaknesses that were pervasive in the second quarter. Nondurable goods sales rose in nominal terms, but declined in real terms. On a year-over-year basis, durable goods spending continues to outpace nondurables 7.9 percent versus 1.9 percent.

In light of falling spending, the savings rate has risen to 5.4 percent, its highest point since September 2010. This increase reflects the anxieties that Americans are feeling about the economy, the labor market, and rising food and energy prices. Individuals continue to make spending decisions with these factors in mind.

On the whole, this measure is one more piece of evidence that the second quarter was extremely weak. Consumer confidence indicators have mirrored these results, and the worry here is that with consumption accounting for 70 percent of GDP, consumer skittishness could have real impacts on economic growth moving forward. With the debt deal nearly complete and many economists and manufacturers expecting a better second half of 2011, hopefully consumers will become more optimistic in the coming months.

Chad Moutray is chief economist, National Association of Manufacturers.

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Modest Growth in Personal Income, Spending in April

Consumers continued spending in April, although at a slower rate than in February and March, according to the Bureau of Economic Analysis. Both personal income and personal consumption grew 0.4 percent in April, with the former unchanged and the latter down from 0.5 percent in March.

Real consumption, though, suggests that consumer spending is only growing modestly, up 0.1 percent in real terms in three of the first four months of this year. Disposable personal income increased 0.3 percent in April, but has remained virtually unchanged in real terms year-to-date.

Nondurable goods accounted for most of the growth in consumption. Americans purchased $21.1 billion (0.8 percent) more in nondurables in March than the previous month, while durable spending increased $3.8 billion (0.3 percent). This contrasts with a couple months ago when it was the other way around.

In real terms, however, both nondurables and durables were flat, suggesting that higher prices accounted for the bulk, if not all, of the increase in spending. The U.S. savings rate currently stands at 4.9 percent, down 0.5 percentage points in the past six months.  What is really hurting consumers right now is higher energy and food costs which is squeezing consumers wallets. 

Manufacturing wages and salaries rose by $800 million in April, after growing by $6.6 billion in March.  Despite the slower growth this month, the overall trend over the past twelve months has been positive for manufacturing compensation, with wages and salaries up 12 percent in 2010 and the year-to-date annual growth rate in 2011 of nearly 8 percent.

Chad Moutray is chief economist, National Association of Manufacturers.

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