Tag: Export-Import Bank

House Foreign Affairs Subcommittee Examines National Security Role of Ex-Im Bank

The House Foreign Affairs Committee’s Terrorism, Nonproliferation & Trade Subcommittee is examining today the role of trade promotion agencies like the Ex-Im Bank in supporting U.S. foreign policy. The United States needs a strong industrial base with robust R&D capability to support its national security interests, and those companies can benefit greatly from overseas markets. In many of those markets, export credit agencies (ECAs) like Ex-Im Bank play a crucial role in supporting suppliers for energy, aerospace and infrastructure projects.

This morning, the NAM hosted a conference call to highlight these issues with former U.S. Commerce Secretary Carlos Gutierrez and former National Security Advisor General James L. Jones. Also joining the call were to two manufacturers that illustrate the role of Ex-Im Bank in supporting their overseas growth and in enabling their commitment to U.S. foreign policy objectives. Secretary Gutierrez and General Jones joined with a dozen former U.S. government officials in February to send a letter to Congress underscoring the importance of commercial and economic diplomacy to U.S. national security. (continue reading…)

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Lawmakers Agree: Ex-Im Has Enough Support To Pass

People might say bipartisanship is missing in the nation’s capital, but you wouldn’t know it if you paid attention to the Export-Import Bank’s annual conference this week in Washington, DC.

Lawmakers and former lawmakers from both parties made clear their support for the Ex-Im Bank, the small agency that facilitates the sale of U.S.-made products abroad. Here’s a brief overview of their comments on Ex-Im: (continue reading…)

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Small Businesses Shine At Ex-Im Annual Conference

As Congress debates whether to reauthorize the U.S. Export-Import Bank, small businesses are telling the story of how they’ve utilized Ex-Im Bank to grow exports and add jobs. Some of these small businesses earned a lot of applause today, as the Ex-Im Bank Annual Conference kicks off in Washington, DC.

Among the companies celebrated were fire truck maker W.S. Darley & Co., cheesecake company Love & Quiches Gourmet, and Texas-based Fritz-Pak Corp. These companies have tapped Ex-Im Bank financing to sell their products abroad. (continue reading…)

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Global Manufacturing Economic Update – March 13, 2015

Here is the summary for this month’s Global Manufacturing Economic Update: 

Manufacturers are facing some significant headwinds from sluggish growth abroad and from a U.S. dollar that has strengthened sharply over the past few months. According to the Federal Reserve Board, the trade-weighted U.S. dollar index against major currencies has risen from 75.6968 on July 1 to 91.5660 on March 6, a 21.0 percent increase. Along those lines, the euro has fallen to its lowest levels since January 2003. It peaked in 2014 on May 6 at $1.3924 for each euro. On March 12, it closed at $1.0640 to the euro, with some expectations that it will move to parity soon. It last reached parity in November 2002. Overall, these developments could hurt the ability of manufacturers in the United States to grow exports. (Some recent comments from me in the media on this topic can be found in the Financial Times, The New York Times and The Washington Post.) (continue reading…)

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U.S. Trade Deficit Increased in December to its Highest Level of 2014

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit rose to its highest level of 2014, up from $39.75 billion in November to $46.56 billion in December. The trade deficit averaged $42.09 billion per month in 2014, an increase from the $39.70 billion average of 2013. Goods exports were higher in the second half of 2014 ($137.51 billion each month on average) than in the first half ($135.01 billion), which was positive; however, goods imports also increased (up from an average of $196.59 billion to $198.73 billion). (continue reading…)

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Global Manufacturing Economic Update – June 13, 2014

Here is the summary for this month’s Global Manufacturing Economic Update: 

Global growth has been slower than desired in the early months of 2014, and as a result, we have seen many analysts—including me—downgrade their forecasts for this year. Indeed, the latest World Bank’s Global Economic Prospects now predicts global GDP growth of 2.8 percent for the year, down from the 3.2 percent forecast in January. Much of that stems from softer growth in the first half of this year in the United States and decelerated activity in the emerging markets. Brazil, Russia and China experienced contracting manufacturing activity levels in May, with only India experiencing modest growth.

The good news is that the global economy is anticipated to pick up in the second half of this year, continuing into next year. The World Bank estimates real GDP growth of 3.4 percent in 2015, with the U.S. economy expanding by 3.0 percent. This would be consistent with the relatively upbeat outlook seen in the most recent National Association of Manufacturers (NAM)/IndustryWeek Survey of Manufacturers. Still, there continue to be threats to growth that could dampen these predictions, including deflationary risks in Europe, tighter monetary policies in the United States and a number of geopolitical struggles. For example, crude oil prices have risen sharply in the past few days to around $107 a barrel this morning because of confrontations in Iraq and worries about energy supplies.

In general, manufacturing activity worldwide continues to expand modestly, but at varying paces across a number of nations. The JPMorgan Global Manufacturing Purchasing Managers’ Index (PMI) increased slightly, up from 51.9 in April to 52.2 in May. Yet, 5 of the top 10 markets for U.S.-manufactured goods had declining levels of activity for the month, up from two in March and zero in December. China tops this list, having experienced its fifth consecutive monthly contraction despite some easing in the pace of the monthly decline. Three of the other four countries with contractions were also in Asia, including Hong Kong, Japan and South Korea. Meanwhile, Brazil has now contracted for two straight months, which is perhaps not the way it wanted to kick off the World Cup. At the other end of the spectrum, we continue to see strong growth in the United Kingdom and the United States, both of which saw heavy production gains in May.

Meanwhile, European economies continue to experience slight expansions, but growth eased in May. The Markit Eurozone Manufacturing PMI decreased from 53.4 to 52.2, its slowest pace since November but the 11th straight month for expanding levels of activity. This resulted from a deceleration in new orders, output, exports and hiring. Nonetheless, growth in the Eurozone remains subpar, with real GDP up just 0.2 percent in the first quarter and expected to increase around 1 percent in 2014 as a whole. Still, retail sales have increased in each of the first four months of 2014, and industrial production increased at its fastest pace since November.

Yet, the big worry in Europe continues to be deflation. Producer prices fell 0.1 percent in the Eurozone in April, with declines of 1.2 percent year-over-year. At the same time, annual inflation has fallen to 0.5 percent. Fears about deflation and slow growth have prompted the European Central Bank (ECB) to take actions to further stimulate the Eurozone economy at its June 5 meeting, cutting its main interest rate to 0.15 percent. In essence, the ECB will charge negative interest rates on bank deposits in an effort to spur institutions to lend more, and there is some speculation that it might pursue a more aggressive asset purchasing program in the future, if needed.

On the policy front, there is an increased focus from both a business and policy perspective on India, with its election of a new prime minister, and Europe, which also elected a new parliament and is constituting a new commission. Trade negotiations in the Asia-Pacific and Europe continue, but work needs to be done on both. Domestically, there is a heavy U.S. focus on the reauthorization of the Export-Import Bank before its expiration on September 30 and passage of a new Miscellaneous Tariff Bill, which has lagged more than 17 months, as well as new legislation on trade secrets.

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

brazilian GDP - jun2014

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Global Manufacturing Economic Update – March 21, 2014

Here is the summary for this month’s Global Manufacturing Economic Update:

Headlines around the world have focused on the Russian annexation of the Crimean peninsula from the Ukraine and the mysterious disappearance of a Malaysian Airlines jetliner. Each of these events injects an element of uncertainty in the global dynamic picture. Indeed, so far in 2014, the global economy has not built on the strong momentum that we saw in the second half of 2013. A number of winter storms in the United States, financial struggles in the emerging markets and decelerating growth in China have combined to soften growth in recent months. Yet, we should not lose track of the longer-term trend, as markets in many of our largest trading partners have made significant progress over the course of the past year, with modest growth rates overall.

The JPMorgan Global Manufacturing Purchasing Managers’ Index (PMI) increased from 53.0 in January to 53.3 in February, its highest point since April 2011. New orders, exports and hiring rose. That said, this global measure might also be skewed higher by stronger performance in the United States, with the Markit U.S. Manufacturing PMI jumping from 53.7 to 57.1, its fastest pace in nearly three years. Sales and production both rebounded in February after weather dampened demand and hampered output and shipments in January. Elsewhere, there were signs that manufacturing activity eased somewhat in February in a number of areas, with a definite split between the developed nations and emerging markets. The HSBC Emerging Markets Index dropped from 51.4 to 51.1, influenced by contracting levels of activity in China, Russia and South Korea.

Speaking of China, its manufacturing PMI has now contracted for two straight months, and a number of economic indicators suggest that its economy has continued to decelerate. Industrial production has slowed from 10.4 percent in August to 8.6 percent in February, and fixed asset investment and retail sales have also eased significantly. These data points suggest that real GDP might fall below the 7.7 percent rate seen in the fourth quarter. Still, growth remains strong overall, even if these figures are well below the rates of growth that many businesses have become accustomed to. In other news, the Bank of China has worked to weaken its currency over the past month, with the Chinese yuan depreciating more than 2 percent since mid-February. The Chinese government has engineered this devaluation, it says, to help fend off speculators; yet, it is also important to note that the yuan has generally appreciated against the U.S. dollar since 2005. (See the attached graphic.)

Looking at our largest trading partners, 8 of the top 10 markets for U.S.-manufactured goods had expanding levels of manufacturing activity, with five countries experiencing slightly faster growth in February than in January. For example, the Canadian economy grew marginally faster in the fourth quarter, with real GDP up 2.9 percent in the fourth quarter. Manufacturing capacity utilization and shipments have also picked up recently, and the RBC Canadian Manufacturing PMI increased from 51.7 to 52.9, suggesting modest growth.

Meanwhile, in Europe, sentiment dipped somewhat in February, but the trend since last summer remains positive. New orders, exports and production eased a little for the month, but growth still remained healthy overall. Real GDP increased 0.3 percent in the fourth quarter, but growth is expected to rise to 1.1 percent for 2014 as a whole. While that indicates very slow growth, it is enough to provide a psychological boost to many businesses and consumers. The one issue that we do continue to worry about is possible disinflation, with still-weak demand keeping price growth at a minimum. Consumer prices have risen just 0.7 percent over the past year, for instance.

On the policy front, the Senate Finance Committee boasts a new chairman, as trade legislation from Trade Promotion Authority (TPA) to the Miscellaneous Tariff Bill (MTB) awaits action. Globally, Russia’s activities in Crimea and the Ukraine are prompting action by the Obama Administration and Congress, while trade talks in the Asia-Pacific and with Europe continue. Work has started on a bill to reauthorize the Export-Import (Ex-Im) Bank before the end of September. Manufacturers are also seeking input on which products should be covered by new international negotiations to eliminate tariffs on environmental goods.

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

chinese yuan - mar2014

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Global Manufacturing Economic Update – February 14, 2014

Here is the summary for this month’s Global Manufacturing Economic Update:

Worldwide equity markets have grappled with struggles in emerging markets in recent weeks, with some countries forced to defend their currencies by raising interest rates. Turkey, for instance, raised its key interest rate to as much as 12 percent to stem significant declines in its lira. Argentina, India, South Africa and other countries have taken similar moves. While many of these nations have suggested that the Federal Reserve’s polices have contributed to their current plight, recent events have exposed larger structural weaknesses in these countries that the Federal Reserve’s quantitative easing program might have camouflaged. Realizing that these challenges might be more isolated, global stock markets have recovered mostly of late.

For manufacturers, the latest data continue to show improvements in most major economies, including emerging markets. Some measures indicated a pullback to begin the new year, with the JPMorgan Global Manufacturing PMI down slightly from 53.0 in December to 52.9 in January. Yet, the larger story is that manufacturer sentiment has increased globally for 15 straight months, and several of our largest trading partners are experiencing multiyear highs. The Markit Eurozone Manufacturing PMI, for example, reflected the fastest pace of growth since May 2011, buoyed by strong gains in new orders and output in countries such as Germany, Italy and Spain. Even Greece had positive manufacturing activity for the first time since August 2009. France remains one of the few European countries that continues to struggle.

In all, nine of the top 10 markets for U.S.-manufactured goods had manufacturing PMI values greater than 50—the threshold for expansion. The one country where the manufacturing sector contracted in January was China. The HSBC China Manufacturing PMI dropped from 50.5 to 49.5, its lowest level in six months. However, we should not make too much of this decline, particularly if February’s data rebound. The measure for output continued to show modest growth, albeit at a slower pace. Moreover, real GDP in China grew 7.7 percent in the fourth quarter and for all of 2013, higher than the 7.5 percent rate in the third quarter. While Chinese economic growth has decelerated from past years, the country has shown improvements from mid-2013 and still continues to grow strongly.

Meanwhile, the U.S. trade deficit narrowed in 2013 overall, but it rose somewhat in December. Spurred energy production in the United States has helped the overall trade balance, with petroleum exports up and imports down for the year. Still, one of the more frustrating storylines of 2013 was the sluggish growth of manufactured goods exports, up just 2.4 percent for the year. This was below the 5.7 percent pace of 2013, and the disappointing increase remained true even with overall improvements in the global economy. Exports of manufactured products to South America and Europe were down 2.0 percent and 0.1 percent, respectively, with an easing in the growth rate of exports to our two largest trading partners—Canada (0.7 percent) and Mexico (5.1 percent). One of the brighter spots was China—defying conventional wisdom—with U.S.-manufactured goods exports up 18.4 percent in 2013. To be fair, however, the manufactured goods trade deficit with China remains large.

From the President’s remarks on Trade Promotion Authority (TPA) in his State of the Union address to hearings on the reauthorization of the Export-Import (Ex-Im) Bank, trade legislation is a prominent part of the discussion in our nation’s capital. Globally, U.S. negotiators will be seeking to make progress in the next rounds of the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (T-TIP) this month and next. India garners substantial attention from the Office of the United States Trade Representative (USTR) and business groups, while the sanctions agreement with Iran takes effect.

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

manufactured exports growth - feb2014

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Global Manufacturing Economic Update – December 13, 2013

Here is the summary for this month’s Global Manufacturing Economic Update:

The Organisation for Economic Co-operation and Development (OECD) says that world trade should rebound next year, with growth increasing from its annual pace of 3.7 percent in 2013 to 5.5 percent in 2014. The OECD also forecasts improvements in real GDP for the United States (up from 1.7 percent to 2.9 percent), Europe (up from -0.4 percent to 1.0 percent) and China (up from 7.7 percent to 8.2 percent). Despite such gains, weaknesses persist in emerging markets, and continued political risks could dampen the prospects for better growth.

The prospects for faster global growth should help drive more manufacturing exports in the coming months. The U.S. trade deficit narrowed in October, averaging $40.2 billion through the first 10 months of 2013. That is lower than the $46.4 billion and $44.6 billion deficits in 2011 and 2012, respectively. Yet, growth in U.S.-manufactured goods continues to be frustratingly slow so far this year, up just 1.9 percent year-to-date relative to the same time period last year. Such a sluggish rate will make it hard to meet the President’s goal of doubling exports by 2015, as outlined in the National Export Initiative. Yet, we hope export sales will improve in 2014, especially with stabilizing economies in our largest international markets.

The JPMorgan Global Manufacturing Purchasing Managers’ Index (PMI) rose to its highest level in more than two years, up from 52.1 in October to 53.2 in November. The key drivers of the increased activity were higher levels for new orders (up from 53.3 to 54.8), exports (up from 51.9 to 52.8) and output (up from 52.9 to 55.3). With the exception of Brazil, all of the other top 10 markets for U.S.-manufactured goods expanded in November. This is an improvement from September, when only six of these economies were growing. The recent progress worldwide has produced notable strides in manufacturing activity for a number of countries, with many reaching PMI levels not seen in several months or even several years. For instance, Japan’s manufacturing PMI reported new orders up at their fastest pace since February 2006. Such data are indicative of the recent gains in the global market, which, while not growing robustly, have made progress of late.

Meanwhile, we are often reminded that we live in an ever-increasing global marketplace, with China’s influence continuing to grow. Last week, we got another example of this. The Society for Worldwide Interbank Financial Telecommunication reported that the Chinese yuan has overtaken the euro as the second-most used currency for foreign trade transactions. In October, the yuan was used 8.66 percent of the time in such transactions, up from just 1.89 percent in January 2012. This suggests a substantial increase in the use of the yuan in trade in a very short period of time. The U.S. dollar continues to be the dominant currency used in trade finance, with parties using the dollar 81.08 percent of the time. However, it does illustrate the changing nature of international commerce and the rising stature of China on the trade front.

Much of the policy news recently has focused on trade negotiations and global competitiveness. While the World Trade Organization (WTO) reached a Trade Facilitation Agreement in Bali, other negotiations with the Asia-Pacific, with Europe and separately on information technology will continue into 2014. Preparations are also underway for major legislative activity in 2014, including on Trade Promotion Authority (TPA), reauthorization of the Export-Import (Ex-Im) Bank and international tax reform.

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

global pmi values - dec2013

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Ex-Im Bank Generates $1 Billion in Profits

Earlier this week, the U.S. Ex-Im Bank announced that it was transferring more than $1 billion to the U.S. Treasury’s General Fund for FY2013. The Bank transferred the revenue – primarily generated from the fees from its customers for loan guarantees, export credit insurance and other services – after covering its own operating costs and contributing to loan loss reserves. In 2012, Ex-Im Bank’s authorizations supported about $50 billion in U.S. export sales and approximately 255,000 American jobs. The Bank has been consistently profitable since 1992, returning billions of dollars in profits to taxpayers over the years and contributing to federal deficit reduction.

The ability of U.S. companies to export has always been a critical issue for the NAM, and exports are increasingly important to the U.S. economy and to the success of domestic manufacturing. Ex-Im Bank as one of the most important tools the U.S. government has to help grow U.S. exports and jobs, and the only tool that American manufacturers have to counter the approximately $1 trillion in export financing that other governments provide their exporters.

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