Tag: trade balance

U.S. Trade Deficit Widened Somewhat in September on Reduced Exports

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit widened somewhat, up from $39.99 billion in August to $43.03 billion in September. This was the highest deficit since May, and it mainly resulted from fewer goods exports (down from $138.65 billion to $136.07 billion). Service-sector exports were also off slightly, down from $59.92 billion to $59.51 billion. In contrast, imports of goods and services were little changed. (continue reading…)

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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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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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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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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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U.S. Trade Deficit Widens in July, Manufactured Goods Exports Growth Remains Sluggish

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit widened from $34.54 billion in June to $39.15 billion in July. The June figure had been the lowest trade deficit since September 2009, but the higher deficit was in-line with consensus estimates. Even with the larger deficit in July, the trend so far this year has been for modest improvements in the overall balance. The year-to-date average trade balance (January to July) was $39.94 billion compared to average of $46.40 billion and $44.55 billion, respectively, in 2011 and 2012.

Higher goods imports were largely behind the widening of the trade deficit, up from $187.87 billion in June to $191.29 billion in July. In contrast, goods exports declined somewhat from $133.81 billion to $182.71 billion. This largely suggests strength in the U.S. relative to our largest trading partners, with import growth outpacing exports. Petroleum was not much of a factor in the change in the deficit, with the petroleum trade deficit up marginally from $10.27 billion to $10.43 billion. The service sector trade balance was lower but essentially unchanged, down from $19.51 billion to $14.44 billion.

Growth in goods exports in July stemmed mostly from industrial supplies and materials (up $1.69 billion) and foods, feeds and beverages (up $402 million). These were offset, though, by weaknesses in exports for non-automotive capital goods (down $1.61 billion), consumer goods (down $1.36 billion), and automotive vehicles, parts and engines (down $179 million).

On the import side, the largest gains were in the industrial supplies and materials (up $1.99 billion), automotive vehicles, parts and engines (up $807 million), and consumer goods (up $710 million). Non-automotive capital goods items were the only major area with declining imports, down $276 million.

The bottom line is that the data continue to show sluggish growth for manufactured goods exports, even the trade balance better this year than in the last two. In the first seven months of 2013, manufactured goods exports equaled $685.03 billion (not seasonally adjusted), or 1.6 percent higher than the $674.27 billion observed in the same time period last year. This indicates that manufacturers continue to struggle to grow their overseas sales, even as we have seen some recent stabilization in both Europe and China. Moreover, it reminds us that growth in manufactured goods exports this year remain well below the pace of the past couple years, making it harder to achieve the President’s goal of doubling exports by 2015.

Europe remains one of the weaker regions for export growth. Using non-seasonally adjusted data, year-to-date exports to the European Union have fallen from $157.86 billion to $150.98 billion. The good news is that we have seen modest gains in many of our largest trading partners, including increases in Canada (up from $170.98 billion to $174.02 billion), Mexico (up from $123.65 billion to $130.30 billion), and China (up from $61.38 billion to $63.82 billion). Other regional data were mixed, with exports to the Pacific Rim countries lower year-to-date (down from $218.21 billion to $216.21 billion) while export to South America were higher (up from $103.12 billion to $106.10 billion).

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

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Global Manufacturing Economic Update – February 8, 2013

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

The new year has begun with some stronger economic data worldwide. While persistent challenges remain—most notably in Europe, but also some lingering fiscal worries in the United States—the overriding trend has been for some modest gains in new orders, production and hiring in a number of key markets for U.S.-manufactured goods. Seven of the top 10 export markets have economies that are expanding, and there were signs that the pace of the contraction in Europe and Japan eased a little. The Purchasing Managers’ Index (PMI) for the Eurozone rose from 46.1 in December to 47.9 in January. The largest improvements in manufacturing, however, were in Asia, where the pace of industrial production has picked up some steam in the past few months. This news spreads beyond China and into other parts of Asia as well.

Our largest trading partners are Canada and Mexico. Much like the United States, Canada’s economy appears to have stalled of late. This is not surprising given the closeness of our two nations in terms of commerce. U.S. frustrations with the fiscal cliff and upcoming federal budgetary battles tend to resonate beyond our borders, with the effects most felt in Canada. Real GDP is expected to grow around 2 percent this year in Canada, mirroring the forecasts for the United States and essentially repeating last year’s rate. Reflecting these trends, Canada’s PMI suggested very slow growth in January, unchanged from December. Mexico’s economy, meanwhile, decelerated throughout much of the second half of 2012, both leading up to and after its presidential elections. Some of the slowdown involved a wait-and-see approach as business leaders assessed the impact of possible new policies coming from the new presidential administration. Industrial production and PMI values tend to reflect this easing, but Mexican real GDP is still expected to grow 3.8 percent in 2013, which is a solid number.

Even with the progress in foreign markets, the most recent international trade figures were a bit of a surprise. The U.S. trade deficit declined sharply from $48.6 billion in November to $38.5 billion in December. Changes in the petroleum balance partially contributed to the decline, but in general, it was a healthy increase in goods exports corresponding with a decrease in goods imports. For the year as a whole, U.S.-manufactured goods exports rose 4.9 percent in 2012 at the non-seasonally adjusted rate, well below the 15 percent rate necessary for the United States to double exports by 2015. While we were on pace for that in 2011, a number of headwinds globally—including a recession in Europe and slowdowns elsewhere—eased the growth of new export sales significantly in 2012, frustrating manufacturers in the United States. Perhaps the improvements noted in this document more recently will bode well for better export figures in 2013.

Next week, we will be closely following industrial production and GDP releases worldwide. Provisional GDP in the Eurozone is expected to show continental output shrinking around 0.3 percent, with data from a number of member countries reflecting weaker conditions as well. Similarly, Eurozone industrial production is forecasted to fall 1.4 percent. Outside of Europe, China will release its trade figures at the beginning of the week, and if recent surveys are accurate, its exports should be improving. In the United States, the Federal Reserve Board will unveil its latest industrial production figures, with an expected slight gain in January.

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

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