Weekly Industry Crib Sheet: U.S. to Become World’s Top Oil Producer by 2035
Credit: Jim Hatter
Credit: Jim Hatter

Plus: Trade Gap Shrinks in September, Manufacturing Technology Orders Surge and Jobless Claims Inch Down.


U.S. Trade Gap Narrows

The United States trade deficit shrank to $41.5 billion in September, a 5.1 percent drop from the revised $43.8 billion total in August and the lowest level in nearly two years, largely due to a rebound in exports and a slower rise in import rates, according to the U.S. Department of Commerce. August exports rose 3.1 percent to $187 billion, while imports rose 1.5 percent to $228.5 billion.

The goods deficit for the month fell to $57.5 billion, a $1.4 billion decrease from August, while the services surplus inched up $0.8 billion to $15.9 billion. Goods exports rose by $5.4 billion, led by higher demand for industrial supplies and materials, foods and beverages and consumer goods. Goods imports increased by $3.9 billion, with the largest gains in consumer goods, industrial supplies and materials and capital goods. Meanwhile, services exports rose by $0.3 billion to $53 billion and services imports fell by $0.6 billion to $37.1 billion.

“[T]he narrower trade deficit could lead the government to revise its July-September economic growth estimate slightly higher than the 2 percent annual rate reported last month. That’s because U.S. companies earned more from overseas sales while consumers and businesses spent less on foreign products,” the Associated Press reports. “Economists cautioned that the increase in exports may only be temporary. One reason is soybean exports rose 32 percent in September from August, in part because of a jump in prices linked to the summer drought.”

In September, the trade gap declined to its lowest level since December 2010 thanks to the largest upswing in exports in over a year. Although the European debt crisis and slower growth in emerging markets impeded sales in the third quarter, overseas demand for U.S.-made goods has rebounded. So far this year, the U.S. trade deficit is at an annual rate of $554 billion, slightly smaller than the $559.9 billion gap for the same period in 2011.

“The data was the latest positive sign for the U.S. economy, which has appeared to perk up as consumers spend more freely and home construction quickens,” Reuters notes. “Chinese demand for U.S. products appeared to help exporters in September. China bought $8.8 billion in U.S. goods and services, up 0.3 percent from a month earlier…”

U.S. to Become World’s Top Oil Producer

Growth in oil output will allow the U.S. to surpass Saudi Arabia as the world’s top oil producer by 2017, leading the rapid growth in energy production and becoming the most self-sufficient energy-producing nation in net terms by 2035, according to a report from the International Energy Agency (IEA).

Over the next two decades, international oil trade patterns will shift, with almost 90 percent of Middle Eastern oil exports drawn to Asia by 2035, the report explains. Total global oil demand will jump from 87.4 million barrels a day to 99.7 barrels per day by 2035.

The U.S. (which currently imports about 20 percent of its energy resources) will become the top oil producer due to the harnessing of new production technologies, as well as rising global energy prices. In addition, drilling in the Gulf of Mexico has rebounded since the BP oil spill two years ago, Forbes explains.

By 2035, natural gas consumption – “the only fossil fuel for which global demand grows in all scenarios” – will also rise dramatically, the report notes. Nearly half of the increase in energy production by 2035 will come from natural gas, and most will be from the U.S., Australia and China. “In the United States, low prices and abundant supply see gas overtake oil around 2030 to become the largest fuel in the energy mix,” according to the report’s authors.

Machinery Demand Surges in September

The value of U.S. manufacturing technology orders totaled $667.47 million in September, an increase of 40.7 percent from August and up 13.4 percent from September 2011, according to the Association for Manufacturing Technology’s (AMT) September U.S. Manufacturing Technology Orders (USMTO) report.

Based on data provided by AMT member companies, the September USMTO report also found that total orders for the first nine months of 2012 reached $4.3 billion, a 5.6 percent increase from the comparable period last year. Equipment demand rose in all five of the regions tracked in the report between August and September, while order totals increased year-over-year in four of the five regions.

The largest monthly gains were in the Southern region, where manufacturing technology orders rose to $103.06 million in September, a 57.9 percent increase over August and 32.1 percent more than the total for September 2011. With a year-to-date total of $619.54 million, sales in the Southern region are up 15 percent from the same period last year.

“In the 17 years that this data has been collected, there is only one other month that broke $600 million. Both of those were in months that reflected sales from IMTS, showing its strength as the largest manufacturing event in the Americas,” Douglas K. Woods, president of AMT, said. “It’s possible we could average $450 million a month for all of 2012 — the largest year ever for this program. This speaks to tremendous strength in the manufacturing industry, and is proof that IMTS 2012 was the strongest show seen in years.”

Jobless Claims Fall

New initial jobless claims fell in the latest week reported, indicating that the labor market may be improving, despite the fact that the effects of Hurricane Sandy have begun to skew the statistics, according to the U.S. Department of Labor. Seasonally adjusted unemployment insurance claims for the week ending November 3 dropped to 355,000, a decrease of 8,000 from the previous week.

However, the four-week moving average, which provides a more accurate long-term picture of the employment situation, increased by 3,250 to a total of 370,500 for the week.

Experts have cautioned that any recent week-to-week declines in jobless claims may be due to distortions caused by the storm that hit the Northeast, which caused power outages that likely prevented officials from receiving unemployment insurance claims. Claims are poised to increase as the storm’s effects on the labor market are fully felt. Historically, large hurricanes drive up jobless claims by roughly 4 percent.

“It may take three to four weeks to see the full impact…which indicates claims may jump back in coming weeks as more storm-related applications begin to be processed,” Bloomberg News explains. “A Labor Department report last week showed the economy added more jobs than projected in October and the unemployment rate rose as hundreds of thousands of Americans rejoined the job search as prospects improved.”

 

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