Today, the U.S. Census Bureau released advance durable goods data [3] for February 2011. The report contains a couple of noteworthy themes, one being that part of the manufacturing sector continues to expand (with the help of foreign demand), and another being that the pace of investment might be slowing some in the first quarter.
Shipments of durable goods (such as trucks, computers, machinery, aircraft, … -- donuts are considered nondurable goods, BTW) have been boosted by foreign demand, and, as we wrote earlier [4], foreign markets account for an increasing share of the durable goods we produce. As further evidence of the importance of foreign markets, according to the Institute for Supply Management’s new export orders index, overseas demand for U.S. manufactured goods has grown for 20 straight months and, in February, new export orders came in at their fastest pace since 1988.
The figure above shows the eight countries that increased their appetite for US goods the most from 2009 to 2010 (for 2011, we only have January trade data). For each of those countries, we show the dollar increase in their consumption of U.S. made durable goods and the percent increase year to year. Our NAFTA partners (who also are our largest overall trading partners) posted the largest increases, which isn’t surprising. Notice that five of the top eight countries are emerging markets: China, South Korea, Brazil, Taiwan, and Singapore. Also notice that these countries posted large percentage increases. As we have written many times before, much of our export GROWTH potential resides in countries exhibiting high GDP growth.
The second main theme in today’s release is that the pace of business investment may be slowing in the first quarter of 2011. Despite a potential slowdown in investment in this quarter, overall most forecasters expect business investment to post a strong gain this year (because of a stronger economy and because of the expensing provisions in the Middle Class Tax Relief Act of 2010).
~Mark Doms, Chief Economist, U.S. Department of Commerce
March 24, 2011
