Plus: Trade Deficit Shrinks, Jobless Claims Plunge, IT Spending Surges and American Bioplastics Demand to Grow.
Trade Gap Narrows in May
The United States trade deficit shrank to $48.7 billion in May, a 3.8 percent decrease from the revised total of $50.6 billion in April, as lower oil prices and a pickup in exports to Europe and China narrowed the gap, according to the U.S. Department of Commerce last week. May exports increased 0.2 percent to $183.1 billion, while imports fell 0.7 percent to $231.8 billion, the lowest level since February.
The goods deficit for the month dropped to $63.5 billion, a $1.6 billion decrease from April, while the services surplus edged up by $0.3 billion to $14.8 billion. Goods exports were relatively unchanged at $130.7 billion, but services exports increased by $0.3 billion to $52.4 billion. Goods imports declined by $1.6 billion to $194.3 billion, and services imports rose by $0.1 billion to $37.5 billion.
Although gains were seen across categories, including capital goods, industrial supplies and consumer goods, experts remain cautious about the sustainability of the growth in light of worsening economic conditions in international markets, which are likely to have a negative effect on manufactured goods exports.
According to accounting firm CGMA’s global economic forecast, optimism about the worldwide economy dropped 11 percentage points between the first and second quarters of 2012, while executives’ optimism about their own companies fell 8 points, with manufacturing firms leading the decline in organizational optimism.
Meanwhile, MAPI’s latest composite business outlook index for manufacturing fell to 61 in June, down from 65 in March. Although the index remains above 50, signaling expansion, the pace of growth continues to slow, “which is not surprising given that the Eurozone economies are slipping into recession and growth in China is slowing.”
Freight Tonnage Forecast to Grow through 2023
Following a notable dip during the recent recession, as well as a mild recovery, the U.S. freight economy, particularly for trucking, is projected to grow significantly in the years ahead, according to the American Trucking Associations (ATA) last week.
In the U.S. Freight Transportation Forecast to 2023, the ATA, IHS Global Insight and Martin Labbe Associates forecast total freight tonnage to grow 21 percent by 2023, with revenue for the freight transportation industry rising 59 percent during the same period. Trucking’s share of the tonnage market will rise more than 2 percentage points to 69.6 percent by 2023, while the industry’s share of freight revenues will rise from 80.9 percent to 81.7 percent.
“The trucking industry continues to dominate the freight transportation industry in terms of both tonnage and revenue, comprising 67 percent of tonnage and 81 percent of revenue in 2011,” according to Bob Costello, the ATA’s chief economist.
In other surface modes: rail’s overall share of tonnage will fall from 15.7 percent in 2011 to 15 percent in 2023; intermodal tonnage is projected to rise 6.2 percent a year between 2012 and 2017, and then 5.4 percent annually through 2023; domestic waterborne tonnage will grow 1 percent annually through 2023; and domestic airfreight tonnage is expected to grow more than 4 percent annually during the forecast period.
Jobless Claims Plummet
New initial jobless claims decreased in the latest week reported, dropping to the lowest level in more than four years. According to the U.S. Department of Labor, seasonally adjusted unemployment claims for the week ending July 7 plunged by 26,000 to a total of 350,000, the lowest figure since March 2008. The four-week moving average, which smoothes out short-term volatility, fell by 9,750 to 376,500.
“Before seasonal adjustments, claims typically rise sharply in the first week of July because auto companies and some other U.S. manufacturers close plants to retool. Workers in many states can file for temporary unemployment benefits when these shutdowns occur,” MarketWatch explains. “Yet for the second year in a row fewer companies shuttered plants, so fewer workers filed applications for benefits.”
The decline in unemployment claims came as a major surprise, as economists surveyed by the Wall Street Journal had expected claims would fall to 370,000 for the week, while a poll from CNNMoney forecast the total to drop to 375,000.
Despite the improvement, hiring remains sluggish nationwide. The private sector added only 80,000 jobs in June, marking the third straight month of weak job creation and leaving the unemployment rate at 8.2 percent. Job growth has averaged 75,000 per month in the second quarter, down considerably from the average monthly gain of 226,000 in the first quarter.
IT Spending to Hit $3.6 Trillion in May
Worldwide spending on information technology (IT) is forecast to reach $3.6 trillion in 2012, a 3 percent increase from the 2011 total of $3.5 trillion, according to a new report from IT advisory firm Gartner.
Much of the projected gains are due to surprisingly strong performance in cloud computing, with enterprise spending on public cloud services expected to grow from $91 billion worldwide in 2011 to $109 billion in 2012. Gartner estimates that global enterprise public cloud services spending will reach $207 billion by 2016.
“While the challenges facing global economic growth persist — the Eurozone crisis, weaker U.S. recovery, a slowdown in China — the outlook has at least stabilized,” Richard Gordon, research VP at Gartner, said in an announcement of the results. “There has been little change in either business confidence or consumer sentiment in the past quarter, so the short-term outlook is for continued caution in IT spending.”
Despite slowing from 7.9 percent growth in 2011, expansion is expected to accelerate again next year, with IT spending climbing to a global total of $3.79 trillion in 2013, a 4.4 percent increase.
U.S. Bioplastics Demand to Grow 20 Percent Annually
American demand for bioplastics will grow 20 percent annually through 2016 to reach 550 million pounds, a recent report from Freedonia Group, Inc. says. According to the market research firm, U.S. bioplastics sales will reach $680 million in 2016.
“Although they have achieved a considerable degree of commercial success, bioplastics remain in an early stage of development, representing only a small niche within the overall plastics industry,” Packaging World reports. “Going forward, technical innovations that enhance the properties of bioplastics and lower their price will drive growth.”
Biodegradable resins accounted for the vast majority of bioplastics volume in 2011, but the emergence of non-biodegradable bioresins will alter the market dramatically, according to the report. By 2021, these materials will represent more than two-fifths of volume demand, up from 13 percent last year.
Polylactic acid will remain the largest bioplastic segment, while bio-based polyethylene and degradable polyesters will grow the fastest at double-digit rates. Non-packaging markets will outpace packaging uses.