Plus: U.S. Trade Gap Widens, Private Firms’ Outlook Improves and Jobless Claims Decline.
U.S. Trade Gap Widens
The trade deficit in the United States swelled in December to a six-month high as a strengthening economy prompted larger gains in imports than exports, the U.S. Department of Commerce reported last week.
The U.S trade gap grew by 3.7 percent to $48.8 billion in the final month of 2011, widening slightly more than forecast by economists surveyed by MarketWatch, who had expected the deficit to hit $48.5 billion.
At $178.8 billion, total December exports were $1.2 billion more than November exports, while imports rose by $3 billion over November to $227.6 billion.
For the full year, the goods and services deficit widened 11.6 percent to $558 billion, up from $500 billion in 2010. Exports of goods and services grew 14.5 percent to a record $2.1 trillion, while imports surged 13.8 percent to a record $2.7 trillion.
“More than half that [$558 billion] figure was thanks to the politically sensitive trade deficit with China, prompting more handwringing about Beijing’s huge advantage in the bilateral economic relationship,” Agence France-Presse reports. “Tit-for-tat trade actions have been building since the Obama administration levied sanctions against allegedly subsidized Chinese tires in 2009.”
The U.S. trade gap with China widened to $23.1 billion in December compared with $20.7 billion in the same month last year. The U.S. Census Bureau notes that the goods deficit with China rose from $273.1 billion in 2010 to $295.5 billion in 2011, as exports increased $12 billion (primarily passenger cars and copper) and imports increased $34.4 billion (primarily computers, household goods and apparel).
“The report pointed to a domestic economy that is pulling in more foreign goods to feed reviving demand. At the same time, export growth is continuing but has eased from the high levels seen early last year,” the Wall Street Journal explains (subscription required). “Exports have been a driver of the U.S. recovery.”
Private Companies Expecting Positive Growth
The majority of privately owned companies are expecting to post strong growth during the coming year, despite lingering uncertainty about the overall state of the U.S. economy.
According to PricewaterhouseCoopers’ (PwC) latest Private Company Trendsetter Barometer, released last week, 78 percent of executives at private companies expect their business to grow over the next 12 months, with 35 percent forecasting double-digit growth and 43 percent projecting single-digit growth. Moreover, 54 percent of private firms are planning to add to their workforce in 2012, up from 48 percent the previous quarter, while only 3 percent plan to cut payrolls.
“After considerable economic misgivings in the third quarter of 2011, Trendsetter executives are increasingly optimistic,” Ken Esch, a partner with PwC’s Private Company Services practice, said in an announcement of the findings. “But even in the late summer and early fall, when anxiety ran high about Congressional gridlock and the potential effect of the S&P downgrade of U.S. debt, private companies didn’t abandon their growth agenda. Instead, they maintained strong revenue forecasts and spending plans.”
The highest growth rates are forecast for companies operating in international markets. Companies that sell in China, India and Brazil are expected to see revenue increases of 11.1 percent, compared to an 8.5 percent growth rate for private companies in general. Sales abroad are expected to contribute to 20 percent of overall revenue for businesses with international reach, and 28 percent for those selling in China, India and Brazil.
Despite the promising indicators, private companies remain doubtful about the prospects for the broader U.S. economy, with 45 percent of respondents citing uncertainty about the U.S. economy in the coming year. Although 39 percent voiced optimism regarding economic prospects, this was down from 63 percent who said the same a year ago, and 16 percent of respondents were pessimistic.
Jobless Claims Fall
New initial jobless claims decreased in the latest week reported, indicating that the U.S. labor market continues to improve. According to the U.S. Department of Labor, seasonally adjusted unemployment claims for the week ending February 4 fell by 15,000 to a total of 358,000, a nearly four-year low. Meanwhile, the four-week moving average, which smoothes out volatility, dropped by 11,000 to 366,250, the lowest level since April 2008.
The latest weekly figures exceeded expectations, as economists polled by Reuters had forecast jobless claims to increase to 370,000 for the week. The improvement “pointed to building strength in the labor market and raised the odds of another solid increase in employment this month.”
“U.S. manufacturing activity grew in January at the fastest pace in seven months. Americans are buying more cars and trucks. And consumers stepped up borrowing in November and December by the most in a decade, which could indicate they are growing more confident in the economy,” the Associated Press reports. “Still, the job market has a long way to go before it fully recovers from the damage of the Great Recession. Nearly 13 million people remain unemployed, and 8.3 percent unemployment is painfully high.”
The rate of new jobless claims has fallen consistently below 375,000 in recent weeks, signaling that hiring has become strong enough to help drive down the unemployment rate. However, job creation still lags behind. Although the U.S. economy created an average of 201,000 new jobs per month between November and January, economists estimate that 250,000 jobs per month would need to be added continuously for several years to bring unemployment back to normal levels below 6 percent.
Employers Worry over Leadership Shortage
A lack of potential leaders is the biggest HR challenge facing organizations this year, new findings indicate.
Based on a survey of 631 senior executives and HR professionals across the U.S., Right Management has found that 31 percent of respondents consider their organization’s lack of high-potential leaders as the most pressing issue in 2012, while nearly a quarter (23 percent) cited a shortage of talent across the board.
“After three years of organizational contraction and less internal investment, companies are taking a hard look at their onboard talent and aren’t pleased with what they find,” according to Michael Haid, senior VP of talent management for Right Management, the talent and career management experts within ManpowerGroup. “Lean times make it hard for organizations seeking to recruit, retain or develop future leaders. And they’re keenly aware of the tough competitive environment they’re in and the need to hold onto and build leadership.”
Meanwhile, 26 percent of senior executives and HR pros point to low engagement and lagging productivity as the biggest HR challenge, and 19 percent are most worried about a defection of top talent to other organizations.
“This is the kind of concern that HR people lose sleep over,” Haid says.