August Trade Deficit Barely Budges But Remains Big Growth and Job Creation Drag; China and High Tech Gaps Hit New Record; Manufacturing Deficit Surges

Right after Congress approved three new trade agreements and the Senate passed a bill to fight currency manipulation, the Census Bureau reported that the August U.S. trade deficit drained about as much growth and job creation out of the feeble American economy as the upwardly revised July gap. Moreover, the enormous U.S. merchandise trade deficit with China hit a new all-time monthly high of $28.96 billion.

The August figures brought America’s total 2011 trade deficit to $376.20 billion – a level 11.54 percent higher than during the first eight months of 2010.

In addition, the August figures show that America’s trade-related economic losses remain heavily concentrated in manufacturing and advanced technology products – which create outsized numbers of high-wage jobs – and in the nation’s trade with China and its rigged exchange rate.

Said U.S. Business and Industry Council Research Fellow Alan Tonelson, “President and Obama and House Republican leaders should take notice. The longer they keep blocking strong measures to offset China’s currency manipulation, the longer America will remain strapped with laughable growth, towering joblessness, dangerous debts – and angry voters.”

U.S. goods trade with China resumed expanding rapidly in August. But this growth followed the longstanding lopsided pattern that has brought robust growth and job-creation to China, and stagnant growth, 9.1 percent official joblessness, and enormous debts for the United States.

U.S. merchandise exports to China rose by 2.94 percent in August, from $8.17 billion to $8.41 billion. But U.S. goods imports from China jumped by 6.35 percent – more than twice as fast – from $35.13 billion to $37.36 billion. The disparity drove the bilateral gap up 7.42 percent in August, from $26.96 billion to the new record of $28.96 billion. And year-to-date, the 2011 goods trade deficit with the PRC is 9.10 percent higher than the comparable 2010 total.

The huge, chronic U.S. manufacturing trade deficit rose by 9.35 percent in August, from $55.19 billion to $60.35 billion. Manufactures exports increased by 4.61 percent, to $83.21 billion, but industrial imports grew considerably faster, by 6.55 percent, to $143.56 billion. On an annualized basis, 2011’s $412.77 billion manufacturing trade deficit is running 17.29 percent ahead of the 2010 gap.

The picture looks similar in high tech goods, where the $9.12 billion August deficit represented only a 0.10 percent increase over the July figure. But the gap nonetheless set a new monthly high for this year, and pushed the annualized 2011 level to $61.88 billion – 32.31 percent higher than last year’s $46.77 billion January-August gap.

The $45.61 billion August overall deficit in goods and services trade came in fractionally lower than the $45.63 billion July deficit. But that July deficit was revised upward by fully 1.83 percent, from $44.81 billion. The $61.42 billion August goods deficit was 0.24 percent higher than the July figure, but that $61.27 number also was revised upward by 1.06 percent, from $60.63 billion. The much smaller U.S. services surplus increased 1.02 percent in August, to $15.81 billion, but the July surplus was revised downward by a larger 1.07 percent.

The separate August export and import flows moved only modestly as well, and saw similar revisions.

Despite the enormity of the absolute U.S. goods trade deficit with China, American goods deficits increased even faster in August with Japan (27.85 percent, largely on a 14.66 percent rise in U.S. imports) and Mexico (11.63 percent). America’s merchandise trade deficit with Canada plummeted by 27.88 percent, as a 12.14 percent U.S. export surge overwhelmed the effects of a 7.17 rise in imports.