Tag: Census Bureau

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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Significant Rise in Housing Numbers

The Census Bureau and the U.S. Department of Housing and Urban Development reported that housing starts rose 6.9 percent in June to its highest level since October 2008. New residential construction jumped from an annualized 711,000 units in May to 760,000 in June. Gains were seen in both single-family and multi-family homes, which are now at 539,000 and 221,000 units respectively.  The largest increase was among the multi-family units, up 12.8 percent for the month. Of course, some of this gain could be called a correction for declines in the multi-family sector the previous month.

The level of new single-family construction is at its highest point in two years, when activity was artificially lifted due to the first-time homebuyer tax credit. This suggests that the housing market is making slow-but-steady improvements, even as overall numbers remain well-below their levels prior to the housing bubble bursting.

Meanwhile, housing permits dropped from 784,000 to 755,000 units. You could interpret this in two ways. First, since permitting is a leading indicator of future activity, you might say that this could put a damper on future activity, potentially alluding to some softness in the coming months. The drop was most pervasive among multi-family units, which have been quite volatile lately.

This leads to a second interpretation. Single-family permitting rose 0.6 permit in June. Therefore, you could also say that June’s permit number was a correction for the large gains of May, especially with volatility among multi-family housing permits. For instance, in the last four months, multi-family permitting was up 32.3 percent in March, down 18.2 percent in April, up 18.5 percent in May, and then down 10.9 percent in June. The larger trend has been positive, albeit choppy. Housing permits in June 2011 were 633,000.

This mostly upbeat assessment is shared by the National Association of Home Builders (NAHB) and Wells Fargo. Their Housing Market Index, which was released yesterday, was up 6 points from 29 in June to 35 in July. This is the highest point since March 2007, showing that the housing market is suddenly showing some signs of strength even as its overall levels are sub-par.

Gains were seen in every region of the country, and the outlook for future activity was also bright. The index for single-family sales over the next six months rose from 33 to 44, with the traffic of potential buyers also higher (from 29 to 33).

Chad Moutray is chief economist, National Association of Manufacturers.

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New Durable Goods Orders Rise in May with Strong Gains in Capital Goods

The Census Bureau reported that durable goods orders rose 1.1 percent in May, rebounding from declines in both March and April. For the second month in a row, transporation orders were strong, up 2.7 percent with the largest gains in aerospace. Excluding transportation goods, new orders would have risen by 0.4 percent.

Along these lines, core capital goods (or nondefense capital goods excluding aircraft) rose 1.6 percent for the month. Other sectors with strength in May include machinery (up 4.1 percent), computers and related products (up 3.3 percent), communications equipment (up 2.3 percent), and electronic equipment and appliances (up 1.1 percent). Metals industries experienced declines, with primary metals orders down 1.5 percent and fabricated metal products down 0.2 percent.

Meanwhile, shipments of durable goods rose 0.7 percent in May. This was the same rate as was observed in April and the third consecutive monthly increase. Transportation dominated these numbers, as well, particularly in the aerospace categories. Other sectors which did well, mirroring those listed above for new orders. Motor vehicle shipments rose 0.4 percent, slower than the growth rates of March and April. Inventories rose by 0.5 percent, continuing their long streak of gains, with unfilled orders unchanged.

Overall, these numbers are welcome news. With so many other indicators reflecting weaknesses in the manufacturing sector, durable goods growth appears to be strengthening after signficant headwinds in March and April. Transportation orders account for the bulk of this gain, but the increases were not limited to motor vehicles and airplanes. Given the importance of the durable goods sector over the past couple years in our recovery, it will be vital for us to get this sector growing strongly again.

Chad Moutray is chief economist, National Association of Manufacturers.

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Consumers Pull Back Spending Somewhat in May

For the second month in a row, consumers have reduced their retail spending. The Census Bureau reported that May retail sales fell 0.2 percent, following a similar fall in April. There were some exceptions. Motor vehicle sales, for instance, rose 0.8 percent, which is a significant improvement after some weaknesses in March and April. Excluding autos, retail sales would have fallen by 0.4 percent. Other sectors with stronger sales included nonstore retailers (up 1.3 percent), clothing and accessories (up 0.9 percent), electronics and appliances (up 0.8 percent) and furniture and home furnishings (up 0.4 percent).

Reduced petroleum prices helped to reduce the sales value at gasoline stations, which was down 2.2 percent. This follows a 1.4 percent decline in gasoline station sales in April, but it also represents the other side of rising sales (and prices) experienced in January, February, and March. If autos and gasoline sales were excluded, retail sales would have fallen by 0.1 percent.

Other decliners included building materials (down 1.7 percent), general merchandisers (down 0.5 percent), food and beverages (down 0.2 percent) and restaurants (down 0.2 percent).

Overall, these numbers suggest that Americans are pulling back on the spending somewhat, even when you adjust for lower gasoline prices. There are some exceptions to this, such as motor vehicles, but it is clear that consumer anxieties are having an impact, at least in the short term. With that said, the longer-term trend remains positive, with retail sales up 5.7 percent year-over-year. Consumers have also been the main driver for real GDP growth, as seen in its most recent revision.

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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New Orders for Factory Goods Fell in April

The Census Bureau reported that new orders for manufactured goods fell 0.6 percent in April, its third decline for the four months of 2012. The decline was fairly widespread but was particularly acute among defense and nondurable goods industries. Durable goods orders were flat, with nondurables down 1.1 percent. Excluding defense goods, new orders would have declined by 0.2 percent. Core capital goods (e.g., nondefense capital goods excluding aircraft) fell 2.1 percent, building on the 2.3 percent loss in March.

Some sectors did better than others, though. The strongest gains in April for new orders occurred in some of the machinery subsectors (e.g., construction, mining), nondefense equipment and aircraft, electrical equipment and household products, and primary metals industries.

Looking at shipments, the data were slightly more positive, but still weak overall. Shipments of manufactured goods dropped 0.3 percent in April, with durable goods up 0.6 percent. Nondurable goods and core capital goods were 1.1 percent and 1.5 percent lower, respectively. In addition to the sectors named above, automobiles and light trucks fared well in April, with higher shipment levels. Food, beverages, leather products, and plastics saw improvements among durable goods, with petroleum shipments down.

Overall, this data – like much of what was released last week – continues to show weaknesses in the manufacturing sector.

Chad Moutray is chief economist, National Association of Manufacturers.

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Manufacturing Construction Spending Rose in March

The Census Bureau announced that construction spending rose 0.1 percent in March, revering two months of declines. Private sector construction grew by 0.7 percent for the month, with public sector spending down 1.1 percent.

Manufacturing construction spending increased 1.8 percent, with manufacturers spending $43.7 billion (at the annual rate). While still below the $44.3 billion rate of December 2011, it marks an improvement from January’s drop-off to $42.7 billion. The longer-term trend is also a positive one, as manufacturers put $31.5 billion of construction projects in place in March 2011, a year-over-year gain of 38.6 percent.

Residential and nonresidential construction expenditures were both up 0.7 percent in March. Aside from manufacturing, other nonresidential sectors with growth in March include transportation (up 6.7 percent), office (up 5.4 percent) and lodging (up 5.1 percent). There was declining activity reported with amusement and recreation (down 3.3 percent), religious (down 2.5 percent) and commercial (down 2.2 percent) institutions.

Public sector construction was mixed, with residential spending up 1.4 percent and nonresidential projects down 1.1 percent in March. Nonresidential sectors with the largest monthly decreases in construction activity include water supply (down 4.5 percent), amusement and recreation (down 3.6 percent), sewage and waste disposal (down 3.2 percent) and highway and street (down 2.5 percent). Gains were reported, though, in conservation and development (up 4.1 percent) and health care (up 3.4 percent).

Chad Moutray is chief economist, National Association of Manufacturers.

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Retail Sales Were Stronger in February Largely on Autos and Gasoline

The Census Bureau reported that retail sales rose much faster in February than in recent months, up 1.1 percent. This was the fastest pace since September, with January sales increasing 0.6 percent (a revised level). The two sectors with the strongest growth were gasoline stations (up 3.3 percent, due to higher prices) and motor vehicles and parts (up 1.6 percent, reversing last month’s 1.6 percent decline). If you exclude autos and gasoline, retail sales rose 0.6 percent, below the 1 percent gain of January.

Outside of those sectors, though, the news was mostly positive.  These included clothing and accessories (up 1.8 percent), building materials (up 1.4 percent), electronics and appliances (up 1 percent), sporting goods and hobbies (up 1 percent) and nonstore retailers (up 1 percent). The only businesses with lower retail sales in February were furniture and home furnishings (down 1.2 percent) and general merchandisers (down 0.1 percent).  Warm weather and improvements in the economy have helped to lift consumer spending.

Year-over-year gains in retail sales indicate a 6.5 percent increase since February 2011. Among the sectors with the fastest yearly sales growth are building materials (up 13.8 percent), gasoline stations (up 10.3 percent), furniture and home furnishings (up 8.3 percent), clothing and accessories (up 7.3 percent) and motor vehicle and parts (up 6.9 percent).

Meanwhile, the Census Bureau also announced new business inventory figures for January. Total inventories rose 0.7 percent, its fourth straight month of healthy increases. Retail inventories led the gain, up 1.1 percent, aided by higher auto sales. Motor vehicle inventories grew by 2.6 percent for the month. Manufacturing inventories grew 0.6 percent, which was stronger than the 0.2 percent increase in December. In addition to motor vehicles, other sectors with large increases in inventories include building materials (up 1.1 percent) and clothing and accessories (up 0.8 percent).

As noted in previous releases, the inventory-to-sales (I/S) ratios remain mostly constant, especially as businesses have done a good job with inventory control. The current I/S ratio for manufacturing is 1.33, which is unchanged from the previous month.

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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