European countries struggling with a sovereign debt crisis and a cooling expansion in China remain obstacles to U.S. export growth. Growth in China’s overseas shipments slowed to 2.9 percent in November from 11.6 percent in October and exports to the U.S. fell 2.6 percent last month from a year earlier, the first decline since February 2011, according to data released this month by the customs administration in Beijing.
Political leaders in China have laid out a plan to boost per capita income and double economic growth.
“After running double-digits growth for over a decade, we start to see China GDP moderating,” Weiwei Chen, chief financial officer of Yum! Brands’ China division, said at a Dec. 6 conference. “We all know that the past strong growth was largely supported by export and investment, yet we expect, per the government’s plan, that consumption will play an ever greater role in continued economic growth.”
The U.S. trade gap with China widened to a record in October, as both imports and exports were the highest ever, today’s report showed.
Imports declined 2.1 percent to $222.8 billion, the lowest level since April 2011, from $227.6 billion in the prior month, led by a $1.32 billion plunge in cell phones, today’s report showed. The decrease followed a surge in September that coincided with the introduction of the latest Apple Inc. iPhone.
While U.S. job gains are helping sustain consumer spending, fiscal tightening slated for early next year threatens growth and might set back employment. Employers added 146,000 jobs in November, the Labor Department reported last week.
Today, Federal Reserve policy makers begin a two-day meeting at which they’ll consider whether to supplement their $40 billion a month of mortgage-bond purchases with Treasury purchases as well once their Operation Twist program expires at the end of the month.
Adjusted for prices, which are the figures used to calculated gross domestic product, the trade gap narrowed to $46.2 billion in October from $46.6 billion the prior month, today’s report showed.
Trade contributed 0.14 percentage point to GDP in the third quarter, and the October reading is an early sign it will help underpin growth this quarter.