The U.S. trade deficit in manufactures continued to rise in the third quarter 2012 compared with 2011, according to a new report from the Manufacturers Alliance for Productivity and Innovation (MAPI). At the same time, the Chinese surplus continued to increase, but at a slower pace than in the first half of 2012.
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In The U.S. Trade Deficit in Manufactures and the Chinese Surplus Continued to Rise in the Third Quarter, Ernest H. Preeg, MAPI senior advisor for international trade and finance, highlights that the U.S. global trade deficit in manufactures rose by 6 percent, or by $8 billion, in the third quarter of 2012 compared with 2011, while the Chinese surplus increased by 4 percent, or by $7 billion.
“The striking distinction between the two growth paths is that while the U.S. deficit grew at a relatively steady pace of 6-7 percent, the Chinese surplus soared by 24 percent in the first half of the year before dropping to 4 percent in the third quarter,” Preeg said. “The reduced growth in the Chinese surplus reflects, in part, the very slow growth or recession in the EU and Japan, and its dampening effect on Chinese exports.”
Manufactured goods constitute the dominant sector of trade, accounting for about 95 percent of Chinese and about 75 percent of U.S. merchandise exports. The sector is also central to technological innovation, as two-thirds of U.S. civilian research and development and new patents derive from the manufacturing sector.
Preeg estimates that the $169 billion increase in the deficit since 2009, based on average value-added per worker, equates to a loss of 700,000 to 1.4 million manufacturing jobs, or almost 10 percent of employment in the sector. For 2012, the job loss is projected to be 125,000 to 250,000.