Encouraging News From the World of Exports
The export of US goods to the rest of the world is providing positive input regarding our forecast for acceleration in the rate of US economic...
The export of goods is an important part of our economy. The $1.646 trillion in exports of goods alone at year-end 2019 accounted for 7.6% of US GDP.
The export of goods is an important part of our economy. The $1.646 trillion in exports of goods alone at year-end 2019 accounted for 7.6% of US GDP. That sum, which does not include the related supply chain, equals automobile retail sales and e-commerce sales combined. This large part of the US economy was 1.6% below the year-ago level with the release of the February data. Exporters and participants in the related supply chain should plan on both ongoing decline in the year-over-year percentage change (12/12) and actual decline in the 12-month exports figure (12MMT). Both are expected to decline into early 2021. Exporters should look for nascent rise in their 3/12 rates-of-change and three-month moving totals (3MMT) in late 2020. These stirrings are likely to turn into overt rise in 2021. If you need help calculating your rates-of-change, we would be happy to oblige.
The chart shows that the US Trade in Goods (exports) 12/12 rate-of-change will reach a low essentially coincident with the World Industrial Production 12/12. Our analysis places the World Industrial Production 12/12 low in early 2021, with a subsequent rising trend that will extend into 2022.
The table below shows the status and industrial production outlook for our major trading partners.
|
Country/Region |
% of Total Exports |
12/12 |
12MMT |
Outlook for Industrial Production |
|
Europe |
20.1 |
1.3 |
$330.8 |
12MMA decline to mid-2021 |
|
Canada |
17.8 |
-2.3 |
$292.5 |
12MMA decline into early 2021 |
|
Mexico |
15.5 |
-4.2 |
$254.5 |
12MMA decline into early 2021 |
|
South America |
10.0 |
-1.2 |
$163.7 |
12MMA decline into 2021 |
|
China |
6.4 |
-9.4 |
$105.1 |
12MMA decline until late 2020 |
|
Japan |
4.5 |
-2.1 |
$74.4 |
12MMA decline until mid-2021 |
Top-tier destinations for US goods will be experiencing a significant decline over the next 8 to 13 months, depending on the region. Look for the first internal signs of pending improvement in your 3/12 rate-of-change. That will mostly likely be accompanied by stability/mild rise in your 3MMT. Use leading indicators to ascertain the viability of the tentative improvements and, if indications are good, implement strategies for increasing demand over the course of 2021. Be sure to include increased spending on advertising, marketing, and, most importantly, on inventory. Let your competitors talk about a long delivery time while you keep the delivery pipeline wide and short. Existing and new clients will appreciate it, and you will gain market share.
Alan Beaulieu
President