Exports Slip in May
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.