No, Not China!  Chile!

Of the 25 largest markets for U.S. exports of manufactured goods, so far this year the title of fastest-growing goes to Chile, where U.S. exports of manufactured goods are up 41.9 percent through August, two and a half times as fast as the 16 percent increase in U.S. exports to the world. Exports to Chile have been spurred particularly by a 70 percent increase in exports of construction equipment and a 46 percent increase in exports of motor vehicles.

Hong Kong and Israel are the second and third fastest-growing markets, with U.S. exports of manufactured goods to both economies up more than 30 percent so far this year.

Four of the top ten fastest-growing major markets are free-trade partners: Chile, Israel, Australia, and Mexico. Soon-to-be free trade partner Colombia also made the top 10, with U.S. manufactured goods exports up 18.8 percent.

Where’s China?  Didn’t make the top 10.  With U.S. manufactured goods exports to China up 12.8 percent through August, China ranked 14^th out of the top 25 markets, between #13 United Kingdom and #15 Italy.

In terms of the dollar growth of exports, Canada is in first place, with U.S manufactured goods exports up $21 billion. Mexico is second, with U.S. manufactured goods exports up $20 billion.  China is third, with $5.3 billion growth, followed by Hong Kong, up $5.1 billion and the Netherlands, up $5.0 billion.

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

Manufactured goods exports slipped in May 2011, according to the Commerce Department trade data released today, falling 1 percent from April, but still tying the record $95.8 billion set in March, seasonally adjusted.  The decline put the year-over-year manufactured goods exports growth at 13 percent, slightly below the 15 percent annual rate of growth needed to double exports in five years.

Imports of manufactured goods, on the other hand, rose 3 percent in May, to a seasonally-adjusted $138 billion.  Particularly rapid increases in imports were in petroleum-based products and also computers and computer accessories.  As a result, the U.S. trade deficit in manufactured goods increased to a seasonally-adjusted $42 billion, reversing the improvement of the previous two months.

The one-month change in both exports and imports, however, is in line with the basic trends that have been visible since the beginning of 2009, with some months slightly above trend and some below.  The May data are within the expected range, and cannot be taken to indicate a change in trend.  The June data will be important in determining whether there has been a shift.

Nevertheless, the basic trend all year has been for imports of manufactured goods to outpace export growth, with the deficit tending to increase.  Unless manufactured goods exports accelerate to a faster rate of growth, the manufactured goods deficit could slip into record territory by next year.

As has been the case all year, manufactured goods trade with America’s trade agreement partners has outperformed trade with countries with which the United States does not have trade agreements.  The latest data indicate that 2011 is the fourth year in a row in which there is a manufactured goods trade surplus with trade agreement partners.  The surplus, moreover, appears to be increasing.

Since 2008, the United States has run a cumulative trade surplus of over $70 billion in manufactured goods trade with trade agreement partners, while running a cumulative deficit of more than $1.3 trillion with countries that are not trade agreement partners. 

Those who are concerned about the U.S. trade deficit need to recognize that our trade problem is with countries that have not entered into agreements which will allow U.S. exports to them to increase faster.  This highlights the need for more trade agreements to lower barriers to U.S. exports to more countries. 

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

The U.S. deficit in manufactured goods grew to a seasonally-adjusted $40 billion in January 2011, based on data released by the Census Bureau today. That was a $6 billion increase over December 2010. Exports of manufactured goods fell 0.5 percent to a seasonally-adjusted $91.4 billion while imports rose 4.1 percent to $131.5 billion.

The biggest shift was in capital goods, where U.S. exports fell 1.2 percent from December, while imports rose 5.2 percent. That accounted for 40 percent of the increase in the deficit. Most of the rest of the increase was in consumer goods and automobiles.

Exports of commercial aircraft, which are subject to wide month to month swings, fell $1 billion in January, and accounted for more than the entire drop in capital goods exports. Particularly rapid one-month increases in imports of capital goods were in industrial machinery (up 16 percent over December), industrial engines (up 18 percent), and medical equipment (up 11 percent).

In terms of year-over-year developments, exports of manufactured goods in January were up 13 percent over January 2010, slightly below the flight path of 15 percent needed to double exports by 2014. Imports of manufactured goods, on the other hand, were up a considerably faster 22 percent.

Highlighting the important fact that U.S. manufactured goods trade performs much better with countries with which the United States has bilateral trade agreements, the latest data show that for U.S. trade agreement partners U.S. manufacturers continue to register a surplus – currently averaging about $1.8 billion a month. 

Today’s report is a reminder of how important it is to move forward with the pending FTAs with Korea, Panama, and Colombia. The NAM has outlined the steps that need to be taken in order to reach the President’s goal of doubling exports in our Blueprint to Double Exports in Five Years.

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

The European Parliament approved the EU-Korea trade agreement today, with 465 votes in favor, 128 against and 19 abstentions. The agreement will take effect on July 1, 2011, immediately removing the vast majority of Korea’s tariffs on manufactured goods (which average 8 percent) imported from European Union countries. You can read all about it here: http://trade.ec.europa.eu/doclib/press/index.cfm?id=680

This approval is a notable development, because it is the first time that the European Parliament exercised co-decision powers on trade agreements. Prior to the Lisbon Treaty, approval of trade agreements rested entirely within the Council. Now, the European Parliament must approve all trade agreements signed by the EU – putting them much closer to the U.S. model, where Congress must approve our trade agreements. Many speculated that this agreement might face a closer vote for approval in the EU Parliament. Still, 76 percent voted to approve –- a percentage far higher than most agreements receive in the U.S. Congress. The European Parliament obviously knows what manufacturers in America know: Removing foreign trade barriers is a boon for exports, jobs and economic growth.

The majority of the U.S. Congress knows this too, and wants to approve the three pending trade agreements we have with Korea, Colombia and Panama. Of course, before our Congress can approve trade agreements, they need the President to send them up. Our pending agreements have been awaiting Congressional approval since 2007. The President has indicated he will quickly transmit the U.S.-Korea FTA to Congress with an eye toward seeking approval in a matter of weeks – but that leaves Colombia and Panama languishing.

Together, the U.S. International Trade Commission (ITC) estimates the three agreements are worth more than $13 billion in new U.S. exports. The majority of those exports will be manufactured goods. Tens of thousands of American jobs will be created and sustained as a result of these trade agreements. They remove tariff and non-tariff barriers, open markets for our goods, give our manufactured products preferential treatment. The longer we hesitate, the more our competitors win our market share as they approve their own trade agreements. The time to move on trade is now.

U.S. exports of manufactured goods broke out of their stagnant pattern of the last few months and grew 2.7 percent in November, to a seasonally-adjusted value of $87.8 billion (See graph below). On a year over year basis, November manufactured goods exports were 16.7 percent higher than last year – staying ahead of the 15 percent annual rate of growth needed to double exports in five years.

Manufactured goods imports outpaced exports, however, growing 4.4 percent in November, to a seasonally-adjusted value of $124.4 billion. The manufactured goods trade deficit, as a result, grew to a seasonally-adjusted $36.7 billion, up $3 billion from October. (Department of Commerce news release.)

The important sector of capital goods, which is over 40 percent of U.S. manufactured goods exports, remained problematic. November capital goods exports grew only 0.5 percent, while imports were up 2.5 percent, and the deficit on capital good rose to $1.8 billion.

The big surprise was in consumer goods, where U.S. export soared 7 percent over October, while imports fell 3 percent. As a result, the consumer goods deficit shrunk $2 billion, to $26 billion.

The latest data confirm that U.S. manufactured goods trade with U.S. trade agreement partners appears poised to show a surplus of more than $20 billion for the third straight year. The manufactured goods deficit is entirely with countries that do not have bilateral trade agreements with the United States.

Today’s international trade numbers released by the U.S. Department of Commerce (here) show our U.S. manufactured goods trade deficit continues to grow, but that  manufactured goods still retain their dominant position, accounting for 80 percent of  U.S. goods exports.   

April exports of manufactured goods were up 24 percent over April 2009, while April imports of manufactured goods were up 22 percent.  Because imports are considerably larger than exports, the import growth rate boosted the dollar value of imports more than the dollar value of exports.  As a result, the April manufactured goods trade deficit grew to $29 billion, up $4 billion from the previous year.

The National Association of Manufacturers had been expecting the trade deficit to increase over the 2009 levels, as the U.S. economic recovery is outpacing that of major markets such as the European Union and Japan — but we did not forecast a return to the $40-50 billion dollar levels of 2005-2006.   The rate of import growth should slow later in the year, and an added export push can stabilize and begin to reduce the trade deficit further.

The April manufactured goods export rate of 24 percent remains significantly above the 15 percent annual rate of growth that will be needed for the next five years in order to reach the President’s goal of doubling exports by 2014.  The rapid rate of growth so far, however, reflects a continuing recovery from the collapse of U.S. exports in 2009 – and achieving the export goal will require additional policy and program changes in order to keep the growth rate at or above 15 percent annually.

One of the policy changes needed is to open up more foreign markets by having more bilateral trade agreements.  Year-to-date data shows the United States continues to run a manufactured goods trade surplus with its Free Trade Agreement (FTA) partners — $8 billion so far. 

The manufactured goods deficit is with countries that have not entered into such agreements with the United States.  Only about 40 percent of U.S. exports go to the FTA partners that have eliminated barriers to U.S. products.  American manufactured goods still face significant trade barriers in the remaining 60 percent of our markets.

Misplaced Congressional fears about trade agreements are delaying implementation and further negotiation of trade agreements, hurting U.S. manufacturing jobs.  Of serious concern is the fact that the United States sits dead in the water, while the European Union is negotiating with key markets, such as Canada, Brazil, and India.  This is no way to ensure that U.S. exports will continue to drive the manufacturing and economic recovery.

See also Secretary Locke’s statement.

The latest results of The NAM/Industry Week Manufacturing Index show that manufacturers’ confidence improved in the first quarter of 2010 to the highest level in more than two years. There was also an uptick in expectations for sales, pricing power, employment and capital expenditures, signaling that the manufacturing recovery should gain steam over the coming year.

These are the major findings of the first quarter 2010 NAM/IndustryWeek Manufacturing Index, a quarterly survey of members of the National Association of Manufacturers (NAM) that launched in the fourth quarter of 1997. The latest results are based on the responses of 223 member companies of the Manufacturers’ association.

When the economy was entering recession in the fourth quarter of 2007, 70 percent of survey respondents had a positive business outlook. By the first quarter of 2009, the level of optimism had fallen to just 28 percent. Subsequently, the share of survey respondents with a positive business outlook began to improve. In the first quarter of 2010, the share of survey respondents with a positive business outlook had returned to a level of 70 percent — the highest level in nine quarters. (See chart below)

Other key findings of the 2010 first quarter survey include:

• Sales expectations for the next 12 months increased to 3 percent, nearly double the 1.6 percent rate anticipated during the two previous quarterly surveys.
• Employment expectations for the next 12 months increased to 0.4 percent, a significant improvement from a year earlier, when employment was expected to fall by 3.6 percent.
• Capital investment expenditure expectations for the next 12 months edged up 0.3 percent, marking a reversal from the decline in the fourth quarter when respondents’ investment expectations moved back into negative territory after increasing in the second quarter of last year.

The first quarter survey also included two timely questions on exports:

(1) Compared to domestic sales, how fast will respondents’ exports grow over the next year?

The results show that 71 percent of survey respondents export their products. Of those that export, about one third (34 percent) expect exports to grow slower than domestic sales over the coming year; more than one third (37 percent) expect export growth to rise as rapidly as domestic sales; and nearly one third (29 percent) expect exports to grow faster than domestic sales.

(2) For survey respondents that export, where will the largest dollar growth in exports take place over the next year?

Nearly half (46 percent) expect the largest dollar growth in exports to be to our country’s NAFTA partners (Canada and Mexico) followed by the countries in Asia/Oceana (26 percent), European Union (19 percent), Latin America (6 percent) and the Middle East (4 percent).

While these survey results are encouraging, it’s important to note that fully 30 percent of respondents do not share this positive business outlook and are struggling to find a footing in the recovery.

Full results of the First Quarter NAM/IndustryWeek Manufacturing Index are online at http://www.industryweek.com/EconInsight/.

Department of Commerce trade data for March released today showed the U.S. trade deficit in goods and services increased $1 billion from February, to $40.4 billion. An increase in the services surplus partially offset a nearly $3 billion jump in the goods deficit. Most of this was in petroleum, but the manufactured goods deficit increased by $1.2 billion as manufactured goods imports expanded more rapidly than exports.

Manufactured goods exports, seasonally adjusted, stood at $83.8 billion in March, up 11 percent from February. Manufactured goods imports were $116.7 billion, up 13 percent. The figures reflected faster growth in consumer goods and automotive imports, not matched by an increase in capital goods exports –- the predominant U.S. manufacturing export.

Comparing March to the same period a year ago, manufactured goods exports were 25 percent larger than March 2009 –- still running well ahead of the 15 percent annual rate that will be needed if the U.S. national goal of doubling exports in five years is to be reached. Manufactured goods imports, though, were up 24 percent, leading to an increase in the deficit.

The U.S. manufactured goods deficit has fallen nearly in half from its peak in 2006 (see graph below), the result both of a more competitive dollar and falling U.S. demand for imports due to the recent recession. The National Association of Manufacturers has expected the deficit to begin rising again with U.S. economic recovery, as consumer goods imports began to increase. Managing the U.S. manufactured goods deficit requires that U.S. exports grow faster than imports –- particularly for capital goods. To achieve this goal will require policy changes to provide more incentives for export and more access to foreign markets through market-opening trade agreements.

So far in 2010 the brightest spot in manufactured goods trade remains the U.S. free trade partners, where collectively, U.S. manufactured goods are in surplus. The manufactured goods deficit is with countries that still maintain barriers to U.S. exports because they have not entered into market-opening agreements with us.

U.S. trade in manufactured goods continued to improve in January 2010, according to the Commerce Department’s trade data released today. The seasonally-adjusted manufactured goods trade deficit decreased slightly in January compared to December 2008, and stood at -$28 billion, or an annual rate of -$337 billion. That stands in sharp contrast to the peak manufactured goods deficit of $520 billion in mid-2006.

Seasonally-adjusted January data show that U.S. exports of manufactured goods were $80.3 billion, up 16 percent over January 2009. Manufactured goods imports were $108.3 billion, up 6.5 percent from last January.

America’s manufacturers continue to account for about 60 percent of U.S. exports of goods and services, so the recovery in manufactured goods exports is good news for the economy and for future job prospects. While the recovery is taking place at a rapid pace, manufactured goods exports are still nearly 20 percent below their July 2008 peak.

The rate at which exports are now expanding puts us in good shape to launch the effort the President has called for to double U.S. exports in five years. That translates into an ambitious 15 percent a year growth rate, and achievement of the goal will require far-reaching changes in U.S. trade policy to open foreign markets more rapidly – particularly through an ambitious program for bilateral trade promotion agreements. An ambitious Doha Round, additional steps to bolster U.S. competitiveness, and other major steps will be needed as well.