MAPI analysis: Large deficit in U.S. trade in manufactures could foreshadow dim outlook for exports
U.S. deficit rises 8% in first quarter, Chinese surplus declines 8%; likely low export growth, rising deficit for U.S. through 2014.
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Disappointing first quarter growth in manufactured exports, together with a continued rise in the extremely large deficit, does not bode well for a resurgence in export competitiveness, according to an analysis from the Manufacturers Alliance for Productivity and Innovation (MAPI).
In the report, Ernest Preeg, Ph.D., MAPI senior advisor for international trade and finance, noted that U.S. manufactured exports grew by only 2%, to $281.9 billion, in the first quarter compared with 2013. The deficit surged by 8%, or by $8.1 billion, following the 9% increase in the fourth quarter of 2013.
Chinese manufactured exports declined by 4%, to $465.6 billion, while the surplus dropped by 8%, or by $16.3 billion. These figures reversed a high-growth path since 2009 that led to a surplus of more than $900 billion in 2013.
“One result of the rising U.S. deficit and the declining Chinese deficit is a dramatic shift in the composition of the rising deficit, away from China and toward the eurozone,” Preeg said. “Of the $8.1 billion increase in the U.S. deficit, less than $1 billion was with China and more than $4 billion was with the eurozone, principally Germany and France.”
Although the U.S. added 32 manufacturing jobs in the first quarter of 2014, Preeg estimates that the increase in the trade deficit caused a net loss of approximately 50,000 jobs in the American manufacturing sector.
“The outlook for the remainder of 2014 is for continued slow U.S. export growth and a rising deficit, but an uncertain course for China, which will be strongly influenced by targeted actions to restore export-oriented growth, particularly for technology-intensive industries,” Preeg concluded.
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