Trade Gap Significantly Widens
The United States trade deficit expanded to $49.9 billion in June, an 18.8 percent increase over the revised $42 billion total reported for May and the highest deficit level in 20 months, according to the U.S. Department of Commerce on Wednesday. June exports fell to $150.4 billion, while imports rose to $200.3 billion.

In June, the goods deficit climbed to $62 billion, a $7.7 billion increase over the previous month, while the services surplus dropped by $0.2 billion to $12.1 billion. Goods exports decreased $2.3 billion to $105 billion in June largely due to declines in capital goods and industrial supplies and materials. Goods imports rose $5.4 billion to $167 billion due to surges in consumer goods and automotive vehicles and supplies. Services exports grew to $45.5 billion and services imports increased to $33.3 billion.

"The larger-than-expected deficit, combined with a previously reported drop in factory inventories, led economists to cut their estimates of the amount of goods and services produced on U.S. soil in the second quarter," the Wall Street Journal reports. "They now believe U.S. gross domestic product grew at an inflation-adjusted, annualized rate of around 1 percent in the quarter."

With the deficit rising to the highest level since October 2008, concerns are increasing that the trade gap will depress overall U.S. economic growth, and although the industrial sector has remained a bright spot in the economic recovery, trade prospects in international markets may hurt industry in the short-run.

"American manufacturers have enjoyed growing demand for their products in Asia. But they have faced weakness in Europe, where the economic rebound has been subdued by a debt crisis that erupted in the spring," the Associated Press explains. "Exports of electric generators, civilian aircraft and machine tools did buck the downward trend in June to post increases."

Manufacturing M&A Activity Surges
Merger and acquisition (M&A) activity among global manufacturing companies in the second quarter of 2010 has shown significant improvement over Q1, posting major increases in the volume and value of deals, according to a report last week from PricewaterhouseCoopers (PwC).

The PwC report found that in Q2 2010, there were 33 announced M&A deals in the manufacturing industry worth $50 million or more, up from 14 deals in the first quarter. Total deal value also rose to $8.5 billion, more than triple the $2.3 billion total for Q1. Over the same period in 2009, there were 12 deals reported with a total value of $3.2 billion.

Smaller deals and transactions appear to be driving the overall improvement, while middle-market and larger deal activities are also increasing, with two "mega-deals" worth $1 billion or more reported in the second quarter of 2010, compared to no mega-deals in the previous quarter and only one for all of 2009.

U.S. manufacturing companies were major contributors to the M&A surge in the second quarter, accounting for 36 percent of all transactions worth $50 million or more. However, this is still below the recent historical average of 61 percent between 2006 and 2009.

"Looking ahead, we expect the deal environment will continue to improve as credit access eases, equity markets advance and economic growth rates stabilize. However, although many factors have improved, others remain weak, such as stubbornly high levels of unemployment and weak residential construction activity," Barry Misthal, the U.S. industrial manufacturing leader for PricewaterhouseCoopers, said in an announcement of the findings. "Nevertheless, we believe that buyers are becoming increasingly optimistic in their near-term economic outlooks."

Jobless Claims Hit 6-Month High
First-time jobless claims for the week ending Aug. 7 rose to 484,000, a 2,000 increase from the previous week's total, according to the U.S. Department of Labor on Thursday. This marked the highest weekly level of initial unemployment claims since Feb. 20, when 486,000 people filed for first-time benefits.

The rising figures are adding to concerns over a weaker-than-expected economic recovery, as the jobless claims number has remained above 480,000 for the second consecutive week, considerably higher than the 460,000 range seen for most of the year, Agence France-Presse reports.

"It's a sign that hiring remains weak and employers may be going back to cutting their staffs," the AP explains. "Analysts say the increase suggests companies won't be adding enough workers in August to lower the 9.5 percent unemployment rate."

Meanwhile, the four-week moving average for jobless claims, which is intended to smooth out volatility in the findings, grew to 473,500, an increase of 14,250 from the previous week's revised average of 459,250.

"Standard unemployment benefits usually last 26 weeks, and the continued claims number does not include those who have moved into state or federal extensions, or people whose benefits have expired but may still be without a job," CNNMoney.com reports.

Container Traffic Rebounding Strongly
Import cargo volume at the nation's major retail container ports is expected to total 14.5 million containers in 2010, up 15 percent from the previous year, the National Retail Federation (NRF) and Hackett Associates recently found.

According to the companies' latest monthly Global Port Tracker report, U.S. ports handled 1.32 million 20-foot equivalent units (TEU) in June, 4 percent more than in May and 30 percent more than in June 2009. June marked the seventh month of consecutive year-over-year improvement in container traffic.

The total for July is estimated to be 1.38 million TEU, up 25 percent over the previous year, while August is forecast at 1.32 million TEU, up 14 percent year-over-year, and September is also forecast at 1.32 million TEU, up 16 percent year-over-year.

"We aren't back to where we were two years ago and consumers aren't convinced that the recession is over quite yet, but 2010 is clearly going to finish better than last year," Jonathan Gold, vice president for supply chain and customs policy at the NRF, said. "In the meantime, retailers are monitoring demand very closely and hoping to see increases in employment and other areas that will boost consumer confidence. Cargo numbers this summer are showing unusually high percentage increases, but that appears to be an indication of shortages in shipping capacity earlier in the year rather than sales expectations."