Welcome to installment two of RealityChek‘s deep dive into new U.S. data that enable us to compare the economy’s merchandise trade performance during the first half of this year with that of the first half of last year. Yesterday, we reviewed America’s biggest goods exporters and importers, and trade deficit and trade surplus sectors – all on a stand-still basis. Today, we’ll look at the fastest and slowest merchandise export and import growers over the last year, and the sectors whose trade balances have improved or worsened to the greatest extents.
Because the subject today is rates of change, and in order to avoid results distorted by unusually small numbers (e.g., the ease with which big percentage changes in a given indicator are resulting from the use of unusually modest base figures), the following lists are drawn from larger lists of the top 50 goods industries in these performance categories. And fortunately, because U.S. imports and exports are relatively highly concentrated, drawing the line at the top 50 costs almost nothing in terms of creating a very representative sample.
Also, as was the case yesterday, these industry categories examined here are those drawn from the six-digit level of the North American Industry Classification System (NAICS), the federal government’s main system for slicing and dicing the economy. The one exception: aerospace. Because of data limitations in that sector, the five-digit data, which combine final products and their parts and components, are presented.
Let’s start with the ten goods industries whose exports, measured in value terms, grew fastest between the first half of last year and the first half of this year, along with the growth rates:
1. Non-anthracite coal & petroleum gases: +180.9 percent
2. Crude oil & natural gas: +109.0 percent
3. Cotton: +89.9 percent
4. LNG: +62.4 percent
5. Semiconductor manufacturing equipment: +58.2 percent
6. Primary smelted non-ferrous metals: +54.0 percent
7. Soybeans: +27.6 percent
8. Petroleum refinery products: +26.1 percent
9. Motor vehicle engines & engine parts: +19.2 percent
10. Corn: +18.7 percent
As is clear, five of these ten sectors are commodity sectors, which add relatively little value to the economy. Two more are industries where relatively little processing, and thus value-adding, takes place (liquid natural gas and the smelted metals). Only three could be considered high value manufactures – the types of industries that historically have made outsized contributions in terms of productivity growth and innovation, and that tend to pay high wages.
Here are the ten industries with the worst export performances on a year-to-date basis:
1. Medicinal & botanical drugs & vitamins: -25.4 percent
2. Turbines & turbine generator sets: -15.1 percent
3. Computer parts: -9.4 percent
4. Autos and light trucks: -8.3 percent
5. Telecomms equipment: -6.6 percent
6. Electricity measuring & test instruments: -5.9 percent
7. Aerospace: -4.0 percent (5-digit, due to reporting limits)
7. Surgical and medical instruments: -1.1 percent
8. Electro-medical apparatus: -0.9 percent
9. Industrial valves: -0.1 percent
9. Computers: -0.1 percent
10. Surgical appliances & supplies: +0.2 percent
10. Analytical laboratory instruments: +0.2 percent
As should be obvious, every single sector here belongs in the high-value manufactures category.
Now for the industries that saw the fastest import growth between the first six months of 2016 and the first six months of this year:
1. Switchgear and switchboard apparatus: +174.3 percent
2. Crude oil and natural gas: +53.7 percent
3. Printed circuit assemblies: +44.2 percent
4. Iron and steel: +41.3 percent
5. Primary aluminum: +38.6 percent
6. Non-diagnostic biological products: +29.4 percent
7. Petroleum refinery products: +22.2 percent
8. Miscellaneous non-citrus fruits: +20.8 percent
9. Motors and generators: +13.7 percent
10. Lighting equipment: +12.7 percent
10. Surgical appliances and supplies: +12.7 percent
This group, too is dominated by high-value industries. And look at those numbers for steel and aluminum, two sectors where the Trump administration has been talking about imposing national security related tariffs
The list of sectors with the worst import growth – indeed, where imports have declined the most – is much more of a mixed bag:
1. Medicinal and botanical drugs and vitamins: -39.4 percent
2. Computer parts: -12.3 percent
3. Women’s and girl’s blouses/shirts: -12.1 percent
4. Primary smelted non-ferrous metals: -8.8 percent
5. Men’s and boys non-work shirt shirts: -8.3 percent
6. Non-costume jewelry: -6.7 percent
7. Semiconductors and related devices: -6.4 percent
8. Audio and video equipment: -5.3 percent
9. Jewelers materials/lapidary work: -4.1 percent
10. Aerospace products: -3.4 percent
Now for the trade balance figures. Remember, they’re especially important because economic theory tells us they’re strong indicators of which industries the United States trades most successfully – and therefore which industries have the brightest futures.
Here are the ten sectors where the trade balance has shown the greatest improvement from the first half of 2016 to the first half of 2017. They’re presented in percentage terms except where deficits have turned into surpluses :
1. Primary smelted non-ferrous metals: $5.00 billion deficit to $0.76 billion surplus
2. Relays and industrial controls: $1.27 billion deficit to $2.26 billion surplus
3. Semiconductors: $1.48 billion deficit to $1.01 billion surplus
4. Non-costume jewelry: +574.44 percent
5. Drawn/rolled/extruded miscellaneous non-ferrous metals: +305.69 percent
6. Miscellaneous basic inorganic chemicals: +300.00 percent
7. Non-anthracite coal and petroleum gases: +224.29 percent
8. Medicinal and botanical drugs and vitamins: +104.35 percent
9. Cotton: +91.09 percent
10. Semiconductor manufacturing equipment: +64.82 percent
Encouragingly, high value manufacturing is pretty well represented here.
And now for those sectors that experienced the worst deterioration in their trade balances.
1. Non-diagnostic biological products: +856.00 percent.
2. Switchboard and switchgear apparatus: +437.35 percent
3. Oil and gas field machinery and equipment: +130.00 percent
4. Iron and steel: +76.25 percent
5. Surgical appliances and supplies: +71.55 percent
6. Printed circuit assemblies: +47.08 percent
7. Crude oil and natural gas: +45.30 percent
8. Primary aluminum: +42.73 percent
9. Turbines and turbine generator sets: +39.46 percent
10. Copper and nickel ores: +35.96 percent
High-value manufactures are well represented here, too – and this list, too, includes steel and aluminum. At the same time, these rates of deterioration are generally smaller than the rates of improvement in the sectors where trade balances changed for the better. So that’s an encouraging development as well.
Of course, whenever “trade” comes up, the word “China” usually isn’t far behind, especially since the Trump administration just announced it was beginning a process that could lead to tariffs on Chinese goods in response to Beijing’s practice of forcing companies to hand over at least some of their best technology in exchange for the privilege of doing business in the vast Chinese market, and to the more conventional intellectual property theft that’s still SOP in the PRC. So tomorrow, RealityChek takes a deep dive into U.S.-China goods trade.