Plus: U.S. Trade Gap Narrows, Factory Output Rises and Manufacturing Continues to Grow.

U.S. Trade Gap Narrows
The United States trade deficit narrowed unexpectedly in November as exports climbed to the highest level in more than two years, according to new data from the U.S. Department of Commerce. Total November exports of $159.6 billion and imports of $198 billion resulted in a goods and services deficit of $38.3 billion in November, down from $38.4 billion in October, the Commerce Department reports.

Most analysts had expected the trade gap to rise to $41 billion, Agence France-Presse says.

“The narrower deficit is likely to prompt economists, who have already become more upbeat about U.S. growth, to again boost estimates for the fourth quarter,” the Wall Street Journal explains. “A narrowing deficit means the U.S. is producing more, both to fill export orders as well as meet domestic demand.”

President Barack Obama has set a target of doubling U.S. exports by 2015 to support the economy’s struggle to recover from a severe recession. Over the first 11 months of 2010, the U.S. has been on track to reach that goal, as exports between January and November increased 17 percent compared with the same period in 2009.

Industrial Production Increases in December
Total output from U.S. factories, mines and utilities increased 0.8 percent in December, led by strong gains in business equipment and electronic products that helped boost the overall rate of growth to the highest level in five months, the U.S. Federal Reserve reported on Friday.

Following a revised 0.3 percent increase in November and a 0.1 percent decline in October, industrial production ended 2010 on a strong note, with manufacturing output climbing 0.4 percent in December due to gains in both durable and non-durable goods production. Mining output also increased 0.4 percent, while utilities production surged 4.3 percent thanks to unusually cold weather that drove up demand for heating.

Total industrial production rose at a 2.4 percent annual rate in the fourth quarter of 2010.

The capacity utilization rate, which indicates how much of the industrial sector’s production capabilities are being used, increased to 76 percent in December, up from 75.4 percent in November but still 0.2 percent below the December 2009 rate. December’s capacity utilization rate was also 4.6 percentage points below the average from 1972 to 2009.

“Rising factory production has played a crucial role in lifting the economy out of the recession,” the Associated Press reports. “Factories started producing more as U.S. companies placed more orders to replenish stockpiles that they slashed during the downturn. Then in the final months of 2010, consumers and businesses showed a bigger appetite to spend, encouraged in part by the improving economy.”

U.S. Manufacturing Continues to Grow
Results of the Manufacturers Alliance/MAPI’s quarterly Survey on the Business Outlook suggest continued expansion of U.S. manufacturing sector activity, although the pace of growth may be slowing.

The December 2010 composite index fell slightly from 77 percent in September to 75 percent in last week’s report, marking the fifth consecutive quarter the index has been above the 50 percent threshold separating contraction and expansion. The current index is dramatically better than the record low 21 percent recorded in March 2009, signaling an impressive turnaround for industry.

The business outlook index is the weighted sum of U.S. shipments, backlogs, inventories and profit margin indexes. In addition to the composite index, the survey includes 12 individual indexes — most of which changed very little between September and December.

“The trends in the composite index and in the individual indexes are remarkable in that most were little changed from their September levels as they continue to remain at relatively high levels,” Donald Norman, MAPI economist and survey coordinator, said in an announcement of the latest quarterly findings. “The takeaway from this quarter’s survey is ‘steady as she goes,’ although the rise in the inventory index suggests that the pace of the expansion has slowed.”

Machine Vision Market Expands
Machine vision components and systems — including cameras, lighting, optics, imaging boards, software, application-specific systems and smart cameras — posted strong sales growth through the third quarter of 2010. Sales expectations are also high for Q4 2010 and Q1 2011.

According to a report from the Automated Imaging Association (AIA) last week, the North American machine vision market had 68 percent year-over-year growth in the third quarter of 2010, up from 60 percent in the second quarter and 34 percent in the first quarter.

The forecast is also positive for the start of 2011. The AIA report found that 68 percent of machine vision companies expect sales to continue improving through the first quarter of 2011. Meanwhile, 28 percent expect to remain at or near the level of Q3 2010 over the next six months and just 4 percent anticipate that sales will decrease.

“These results are very impressive, leaving little doubt that the recovery in the North American machine vision market is real and sustainable,” Paul Kellett, AIA’s director of market analysis, said in an announcement of the findings. “Based on industry expectations, we expect the recovery to continue at least another six months.”