By James R. Hagerty
For U.S. manufacturers trying to sell their goods abroad, the
new year might not be any easier.
An already enormous U.S. trade deficit in manufactured goods
grew even larger in 2014. For the year's first 10 months, the gap
swelled to $606 billion from $540 billion a year earlier, largely
due to weak demand in Europe and in Latin America, two of the main
markets for U.S. goods. Meanwhile, the U.S. imported increasing
amounts of merchandise, from flat-screen televisions to steel
pipes, from China. A stronger dollar made U.S. products more
expensive overseas and imports cheaper.
In 2015, demand for U.S. goods should be slightly stronger from
Europe, Japan and Latin America, predicts Daniel Meckstroth, chief
economist at the MAPI Foundation, a research group. He also expects
the U.S. economy to grow at a faster pace than those of other
advanced economies. That growth, and a strong dollar, will pull in
imports.
U.S. exports are strong in some areas, including civilian
aircraft, such as Boeing Co. airliners; industrial machinery,
especially for semiconductor plants; and turbines and engines used
for such things as natural-gas transmission and electric-power
generation. Weak areas include electrical lighting and steel
products.
Imports of products from iron and steel mills in the first 10
months of 2014 surged 41% from a year earlier. China and other
countries with excess steel capacity flooded the U.S. market.
Lower gasoline prices are allowing Americans to spend more on
other things. To the extent they buy cars, trucks and food, that
will help U.S. manufacturers. If they buy clothing, electronics,
furniture and other household items, most of the benefit is likely
to flow overseas. At the same time, lower petroleum prices are
likely to hurt sales for U.S. makers of oil-exploration
equipment.
One good sign: Investment in manufacturing plants is on the
rise. Dodge Data & Analytics estimates that construction
started on 65.1 million square feet of manufacturing space in the
first 11 months of 2014, easily outstripping the 52.9 million
square feet for all of 2013. Much of that construction relates to
petrochemical plants destined to process growing amounts of shale
gas.
Write to James R. Hagerty at bob.hagerty@wsj.com
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