Trade deficit dips, led by manufacturing, Eurozone, and Mexico import drops
-- Manufacturing Business Technology, 11/9/2007 8:41:00 AM
The U.S. trade deficit dipped by 0.62 percent in September, as a steep drop in goods imports from the Eurozone and Mexico—and in the manufacturing sector—highlighted the effects of substantial dollar weakening, slower U.S. growth, and continued expansion abroad. Yet despite these ideal deficit-reduction conditions, the pace of improvement remains sluggish and the U.S. trade deficit in high-tech products keeps mounting rapidly.Moreover, the relentless surge in the huge U.S. trade deficit with China underscored the need for a major change in Washington’s trade policy focus, according to U.S. Business and Industry Council Research Fellow Alan Tonelson.
“It’s time for the President and Congress to stop wasting time expanding trade with miniscule markets like Peru, and start responding to the burgeoning China challenge,” says Tonelson.
The decrease in the overall September trade deficit, to $56.45 billion, resulted from a 1.08-percent increase in total exports and a 0.59-percent drop in total imports. Changes in the broad categories of U.S. trade flows were minor.
The goods deficit fell 0.50 percent, from $66.08 billion to $65.75 billion. The non-oil goods deficit dipped 0.58 percent, from $39.83 billion to $39.63 billion. The oil deficit shrank only from $24.15 to $24.13 billion. And the services surplus inched up 0.22 percent, from $9.28 billion to $9.30 billion.
Much sharper improvement was registered in the manufacturing trade deficit, which fell 6.15 percent, to $50.20 billion. A 4.19-percent decrease in manufactures imports led the way; despite strong global growth, however, manufactures exports rose only 2.79 percent.
Year-on-year, manufactures exports have been rising slightly more than twice as fast (10.69 percent) as manufactures imports (4.69 percent). But the latter remain so much larger than the former that the deficit has declined by only 2.80 percent during this period.
Moreover, the longstanding U.S. trade deficit in high tech goods jumped 9.85 percent in September, from $4.70 billion to $5.16 billion. Worse, on a year-on year basis, the high-tech goods deficit is up fully 41 percent, to $37.66 billion, as imports have been growing 1.8 times faster than exports.
Once again, America’s merchandise trade deficit with China contrasted sharply with its goods balances with other regions. In particular, the U.S. deficit with the Eurozone countries plummeted more than 43 percent in September, to $8.16 billion, keyed by a 13.54-percent drop in imports. The Mexico merchandise deficit fell by 9.35 percent, to $6.30 billion, thanks largely to an 8.56-percent decline in imports. At the same time, despite the dollar’s fall, which makes U.S.-made goods cheaper in both areas, U.S. exports increased to the Eurozone by only 2.05 percent and actually sank by 7.89 percent to Mexico.
Yet America’s merchandise trade deficit with China increased by another 5.50 percent in September, to $23.77 billion. U.S. imports from China grew by 3.34 percent, to $29.38 billion, while exports fell by 0.58 percent even though the Chinese economy keeps growing at double-digit rates.
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