Tag: National Export Initiative

U.S. Trade Deficit Widened Further in February

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit rose from $39.28 billion in January to $42.30 billion in February. This was the highest deficit since September, and it was the result of a decrease in goods exports (down from $133.75 billion to $131.72 billion) and an increase in service sector imports (up from $38.49 billion to $39.29 billion).

The increased goods trade deficit (up from $59.50 billion to $61.73 billion) was almost evenly distributed by petroleum and non-petroleum factors. Petroleum exports declined somewhat (down from $12.34 billion to $11.09 billion), but petroleum imports also decreased slightly (down from $31.68 billion to $31.03 billion).

Looking specifically at goods exports by sector, the February numbers were mostly lower. The exceptions were the consumer goods (up $1.19 billion) and automotive vehicles and parts (up $96 million) sectors. These gains were more than counterbalanced by lower export levels for industrial supplies and materials (down $2.67 billion), non-automotive capital goods (down $894 million), and foods, feeds and beverages (down $18 million).

Growth in manufactured goods exports continue to disappoint. Exports in the first two months of 2014 were $182.75 billion using non-seasonally adjusted data. This was down 0.6 percent from the $183.78 billion observed for January and February 2013. As such, it indicates that manufactured goods exports remain soft despite some economic progress abroad in recent months, continuing a trend that we saw last year.

In 2013, manufactured goods exports rose 2.4 percent, decelerating from the 5.7 percent annual growth rate observed in 2012. It is also well below the 15 percent rate that would be needed to double exports by 2015, as outlined in the President’s National Export Initiative. Hopefully, cautious optimism for better worldwide growth rates will produce improved manufactured goods exports moving forward.

On the positive side, goods exports to our five largest export trading partners were mostly higher year-to-date. For instance, Mexico (up from $35.61 billion to $37.50 billion), China (up from $18.69 billion to $20.24 billion), Japan (up from $10.18 billion to $10.88 billion), and Germany (up from $7.65 billion to $8.22 billion) all notched increases in exports in the first two months of this year relative to last year. The lone holdout was our largest trading partner, Canada (down from $46.35 billion to $46.15 billion), which had marginal declines.

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

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U.S. Trade Deficit Narrowed in 2013, but Rose Somewhat in December

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit rose from $34.56 billion in November to $38.70 billion in December. The drop stemmed entirely from a drop in good exports, down from $137.05 billion to $132.76 billion. Goods imports were essentially unchanged, up from $191.28 billion to $191.58 billion. Meanwhile, the service sector trade surplus increased somewhat, up from $19.68 billion to $20.12 billion.

Despite the higher trade deficit in December, it is notable that the deficit narrowed in 2013 as a whole. The average monthly trade deficit in 2013 was $39.29 billion, or $5.26 billion less than the $44.56 billion average observed in 2012. Behind this figure, the goods trade deficit declined from an average of $61.79 billion in 2012 to $58.60 billion in 2013, with the service sector trade surplus rising from $17.24 billion to $19.30 billion.

The decline in goods exports in December were primarily from non-petroleum factors. While the petroleum trade deficit increased slightly (up from $9.07 billion to $9.59 billion), the larger contributor to the higher total trade deficit stemmed from the non-petroleum trade deficit (up from $41.36 billion to $45.18 billion). With that said, one of the bigger trade stories of the past year has been the narrowing of the petroleum trade deficit, down from an average of $13.15 billion each month in 2012 to $11.00 billion in 2013. Increased exports and fewer imports of petroleum led to this result.

Looking specifically at the goods exports sector, the December numbers were mostly lower, as noted. There were reduced exports in the industrial supplies and materials (down $1.1 billion), non-automotive capital goods (down $1.1 billion), automotive vehicles and parts (down $769 million), and consumer goods (down $708 million) sectors. On the positive side, exports of foods, feeds and beverages increased by $364 million, mainly due to higher exports for soybeans and wheat.

Growth in manufactured goods exports was disappointingly slow last year. Manufactured goods exports totaled $1.183 trillion in 2013 using non-seasonally adjusted data. This was up just 1.6 percent from the $1.164 trillion observed in 2012. As such, it indicates that growth in manufactured goods exports remains soft, decelerating from the 5.7 percent growth rate observed through all of last year. It is well below the 15 percent rate that would be needed to double exports by 2015, as outlined in the President’s National Export Initiative.

Hopefully, stabilization in the global economy and cautious optimism for better worldwide growth rates in 2014 will produce improved manufactured goods exports moving forward.

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

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Global Manufacturing Economic Update – January 10, 2014

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

As we begin 2014, the global economy appears poised to grow stronger than it did last year. For only the second time since we have prepared this report, all top 10 markets for U.S.-manufactured goods were expanding, with Purchasing Managers’ Index (PMI) readings greater than 50. (The other time was last October) As recently as September, just six of these nations were growing. Such progress suggests that weaknesses experienced over the summer months have begun to dissipate, and indeed, we have seen stabilization in both China and Europe since then.

The U.S. manufacturing sector has also begun to pick up, with sales and production accelerating from the third quarter forward. Moreover, the budget deal passed in December and negotiated by Sen. Patty Murray (D-WA) and Rep. Paul Ryan (R-WI) hopefully will avoid a potential government shutdown until the fall of 2015—something that has helped ease some anxieties in the business community. Christine Lagarde, managing director of the International Monetary Fund (IMF), has said that the improved outlook in the United States will allow the fund to revise its global growth prospects. In contrast, the IMF had downgraded its estimates for worldwide growth in the midst of October’s budget impasse. At that time, it predicted 3.6 percent growth in world output for 2014, down from 3.8 percent in its summer forecast. The IMF will release its next World Economic Outlook by the end of January.

Despite progress on the international economic front, exports of U.S.-manufactured goods have continued to grow very slowly. Through the first 11 months of 2013, manufactured goods exports have risen just 2.0 percent relative to the same time frame in 2012. This represents a deceleration from the 5.7 percent annual pace for 2012 and the roughly 15 percent required to meet President Obama’s National Export Initiative goals. Goods exports to Europe fell from 2012 to 2013, and we saw some easing in many other key markets as well. One of the brighter spots was goods exports to China, even as we continue to have a large trade deficit with that country.

We hope the better global growth will yield improvements for U.S.-manufactured exports in 2014. Many markets ended the year with manufacturing activity on a positive note. The Markit Eurozone Manufacturing PMI rose from 51.6 in November to 52.7 in December, expanding for the sixth consecutive month and reaching a level not seen since May 2011. While growth in Europe still has much room for improvement, it is clear that its emergence from the continent’s deep two-year recession has had a positive impact on overall sentiment. Likewise, manufacturing activity was generally higher in Asia and the emerging markets, even as the pace of growth in many of these economies eased a bit in December. For instance, the HSBC China Manufacturing PMI decreased from 50.8 to 50.5, but more importantly, activity has now risen modestly in the country for five straight months.

Our two largest trading partners have also made progress in recent months. While the RBC Canadian Manufacturing PMI fell from 55.3 to 53.5, manufacturers in Canada have reported steady improvements in activity since contracting briefly in March. Similar to the United States, the Canadian economy has picked up, with real GDP rising from 1.6 percent at the annual rate in the second quarter to 2.7 percent in the third quarter. Manufacturing capacity utilization rose to 80.5 percent in the third quarter, which was better than the 79.9 percent rate in the second quarter (but still below the 81.7 percent rate one year ago). Meanwhile, manufacturing activity in Mexico has risen for the fifth straight month, with stronger sales and production in December. Nonetheless, Mexican growth continues to climb quite slowly, with real GDP up just 1.6 percent in the second quarter and 1.3 percent in the third quarter.

Legislatively, House and Senate trade champions moved forward this week on new trade promotion authority (TPA) legislation, while trade negotiations in the Asia-Pacific region and with Europe continue to move forward.

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

emerging markets PMI - jan2014

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U.S. Trade Deficit Fell Sharply in November to its Lowest Level in Over 4 Years

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit fell sharply from $39.33 billion in October to $34.25 billion in November. This was the smallest deficit observed since August 2009, and it was the result of rising goods exports and, more particularly, a decline in goods imports for the month. Goods exports increased from $135.61 billion to $137.07 billion (an all-time high). At the same time, goods imports dropped from $194.45 billion to $191.00 billion.

A fair share of the improved trade balance in November came from lower petroleum imports, which declined from $32.09 billion to $28.49 billion. Not surprisingly, this corresponded with reduced petroleum prices. The average cost of one barrel of West Texas intermediate crude oil decreased from $106.29 in September to $100.54 in October to $93.86 in November.

In terms of goods exports, major sectors with the largest gains in November were industrial supplies (up $707 million), non-automotive capital goods (up $336 million), and automotive vehicles and parts (up $141 million). These were somewhat offset, though, by declining exports for consumer goods (down $515 million) and foods, feeds, and beverages (down $124 million).

One consistent theme in the international trade data in 2013 has been the frustrating pace of growth for manufactured goods exports. Manufacturers exported $1.086 trillion in goods through the first 11 months of the year, a 2.0 percent increase over the $1.065 trillion exported during the same time frame in 2012. As such, there has been a clear deceleration in manufactured goods export growth, down from the 5.7 percent annual gains of 2012 and the roughly 15 percent required to meet the President’s National Export Initiative goals.

Goods exports to Europe remain lower year-to-date in 2013 relative to 2012, down from $243.74 billion through the first 11 months of 2012 to $241.40 billion in 2013. On the positive side, goods exports with Canada (up from $270.29 billion to $277.04 billion), Mexico ($277.04 billion), and China (up from $100.17 billion to $108.93 billion) have increased. Nonetheless, these gains with our three largest trading partners have been more modest than we might prefer.

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

 

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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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U.S. Trade Deficit Narrowed in October, But Manufactured Goods Exports Growth Remains Soft

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit narrowed from $42.64 billion in September to $40.64 billion in October. The drop was mostly attributable to a larger increase in goods exports (up from $132.29 billion to $135.27 billion) than for good imports (up from $194.71 billion to $195.49 billion). The service sector trade surplus increased marginally, up from $19.45 billion to $19.59 billion.

Petroleum was mostly a non-factor in shifting the deficit in October, with the petroleum trade deficit narrowing modestly, up from $19.88 billion to $19.65 billion. Both petroleum exports and imports were higher for the month, but essentially offsetting one another. This suggests that non-petroleum trade accounted for the bulk of the change in the overall trade deficit in October.

Looking specifically at goods exports by sector, the data were mostly positive. There were increased exports for industrial supplies and materials (up $1.5 billion), consumer goods (up $1.0 billion), foods, feeds and beverages (up $618 million), and non-automotive capital goods (up $274 million). The lone decliner was automotive vehicles and parts, down $209 million for the month.

Similarly, on the goods imports side, automotive vehicle and parts imports were also lower, down by $1.0 billion. All of the other major sectors were higher. This included industrial supplies and materials (up $778 million), consumer goods (up $514 million), foods, feeds and beverages (up $278 million), and non-automotive capital goods (up $264 million).

Despite the progress in the monthly trade deficit, we continue to see disappointing growth for manufactured goods exports. Through the first 10 months of 2013, manufactured goods exports were $986.53 billion (using non-seasonally adjusted data). This was up just 1.9 percent from the $968.38 billion observed over the same time period in 2012. As such, it indicates that growth in manufactured goods exports remains soft, decelerating from the 5.7 percent growth rate observed through all of last year. It is is well below the 15 percent rate that would be needed to double exports by 2015, as outlined in the President’s National Export Initiative.

Hopefully, stabilization in the global economy and cautious optimism for better worldwide growth rates in 2014 will produce improved manufactured goods exports moving forward.

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

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Under Secretary Sanchez Talks Manufacturing, Exports at CMA Meeting

Yesterday, Under Secretary of Commerce for International Trade, Francisco Sanchez spoke at the NAM’s Council of Manufacturing Associations (CMA) winter meeting.

Under Secretary Sanchez reiterated calls that we are at the beginning of a “manufacturing renaissance” and talked about the number of quality jobs created in the industry over the course of the last two years. He highlighted a Department of Commerce report which said that in 2009 alone, manufacturing made up more than 11 percent of GDP.

In order to build off the successes of manufacturing, and to really enter into a manufacturing renaissance, we have released our own four-point plan to guide the process. A Manufacturing Renaissance: Four Goals for Economic Growth addresses both the areas where we are thriving and the areas that need more attention.

Among those issues are exports. The NAM has been a strong supporter of the president’s goal to double exports by 2015. Manufacturers play an imperative role in that effort and Under Secretary Sanchez says “the correlation between jobs, exports and manufacturing is clear.” We agree.

Under Secretary Sanchez also spoke about the New Market Exporter Initiative. This initiative helps U.S. businesses find new markets, opportunities for export training and new contacts with distributors and representatives to expand their business.

The topic of manufacturing has been at the forefront of the Republican presidential debates and recent remarks by President Obama. It is encouraging to see so much attention on the industry that has led our economic recovery and continues to do so.

“U.S. manufacturers are vital to our economy and future growth.  It’s work that I’ve always valued.  My father ran a candy factory.  He had to make payroll.  He had to monitor inventory.  He had to sell and market products.  From his experience, I know how a strong manufacturing sector benefits workers, communities and our nation.” – Under Secretary Sanchez

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Manufactured Goods Exports Improve in April

The April U.S. foreign trade data released by the Department of Commerce today show some positive news for manufacturers. U.S. manufactured goods trade in April recorded a second favorable month in a row, with a strong increase in exports and a decline in the manufactured goods deficit. The important category of capital goods showed particularly strong export growth.

Manufactured goods exports in April stood at a seasonally-adjusted $97.2 billion, up 1.2 percent over March – an annual rate of increase of 16 percent.  This continues the generally strong pattern of the last year, and April manufactured goods exports were 15 percent larger than in April 2010. Fifteen percent a year is what is needed to meet the goal of doubling exports in five years, so manufactured goods are still on that path.

Manufactured goods imports in April were $134 billion, down one percent from March. Part of the reason for the drop was a 19 percent one-month drop in imports from Japan, reflecting the results of the disruption caused by the tsunami and nuclear disasters that affected Japan.

The U.S. balance of trade in manufactured goods declined in April as a result of the stronger export growth and slight decline in imports. The seasonally-adjusted deficit of $36.8 billion was the lowest so far this year, but that deficit implies an annual rate of $442 billion. (continue reading…)

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Manufactured Goods Export Growth Slows in February

February manufactured goods exports grew only 2.4 percent at an annual rate from January, while manufactured goods imports increased at an annual rate of 18.9 percent.  As a result, the manufactured goods deficit seasonally adjusted, grew to $41.9 billion from January’s rate of $40.7 billion.

On a year over year basis, comparing February 2011 with February 2010, manufactured exports were up 11.6 percent, marking the third month in a row of growth lower than the 15 percent annual rate of increase needed to achieve the goal of doubling exports in five years. The graph below illustrates this point. 

Imports of manufactured goods were up over 17 percent from February 2010, contributing to a growing deficit. Autos, capital goods, and consumer goods imports all showed rapid growth.

Manufactured goods exports under-performed the overall growth of goods and services, which were up 14.2 percent, driven largely by the blistering growth of agricultural exports, up 30 percent over February 2010.

U.S. exports of capital goods, the largest category of manufactured goods exports, showed particular lack of energy. February capital goods exports stood at $39 billion, down slightly from January’s $39.3 billion, and hardly changed from $38.8 billion exported in July 2010. Nineteen categories of capital goods exports declined in February, while 11 categories grew. The only significant growth, was in civilian aircraft and aircraft engines.

February’s figures underscore the need for an effective program to double exports, and should prompt the Administration to move quickly on reducing barriers to U.S. exports, particularly by sending the three pending trade agreements – Colombia, Panama, and Korea – to Congress for quick passage and implementation. The Administration then needs to move rapidly to conclude other export-enhancing trade agreements to open more foreign markets to U.S. exports.

The existing U.S. bilateral trade agreements, continued to be the brightest spot in the manufactured goods trade picture. The latest data for 2011 show a continuation of the manufactured goods trade surplus with U.S. trade agreement partners, a surplus that has accumulated to about $70 billion over the past three years. 

Frank Vargo is vice president of international economic affairs at the National Association of Manufacturers.

 Manufactured Goods Exports

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U.S. Lags as an Exporter of Manufactured Goods

The United States is seriously under-performing as an exporter of manufactured goods. It exports only 45 percent as much of its manufacturing output as the world average, according to a National Association of Manufacturers (NAM) benchmarking analysis based on recently-released 2009 data from the United Nations Statistics Division

 The United States is the world’s largest manufacturer, producing one in every five dollars of manufactured goods in the entire world. But it is lacking in export orientation and among the 15 largest manufacturing economies, the United States ranks 13th in terms of the proportion of its manufacturing output that it exports (export intensity).  Only Brazil and the Russian Federation have lower export intensity, as is seen in the graph below. 

 The 15 major producers together accounted for approximately 80 percent of the world’s manufacturing in 2009. Taiwan led the major economies in export intensity, followed by Germany and Korea.    

At 45 percent of the world average, the United States is exporting less than half as much of its manufacturing output.  If the United States were to export only at the average, manufactured goods exports in 2009 would have been more than $700 billion larger than they were, and the United States would not have had a deficit in its merchandise trade – including oil imports.

The NAM also benchmarked “import intensity,” comparing imports of manufactured goods relative to the size of domestic manufacturing industries around the world. The analysis shows that while in absolute terms our imports of manufactured goods are very large, relative to the size of the U.S. manufacturing industry, they are only 75 percent of what they could have been had we imported at the average rate for the world.

Importing at 75 percent of the world average and exporting at 45 percent of the world average explains why the United States has a large manufactured goods trade deficit. These data show that relative to the size of the U.S. manufacturing industry, the United States is exporting considerably less than it is importing.

The Administration’s National Export Initiative to double exports in five years is badly needed and deserves the most serious attention by both the Administration and Congress.

The mature domestic market for manufactured goods is unlikely to grow rapidly enough to outpace productivity increases and create jobs.  A major source of job creation is going to depend on faster export growth – with the United States joining the major league of “power exporters,” and the time to start achieving that goal is now.

 One of the key imperatives if U.S. exports are to grow more rapidly and elevate the U.S. export performance is greater access to foreign markets.  This can only come from trade agreements such as the three pending agreements with Colombia, Korea, and Panama – and then an expansion in the negotiation of trade agreements with all significant markets.  U.S. trade agreements have proven their worth, as newly-released trade data show that 2010 marked the third year in a row of a U.S. manufactured goods trade surplus with U.S. free trade partners – a surplus cumulating to $70 billion.

Frank Vargo is the NAM vice president for international economic affairs.

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