U.S. Trade Optimism at All-Time High

March 17th, 2014
in econ_news

from HSBC North America

Trade optimism among U.S. business leaders is at an all-time high and the U.S. is positioned to retain its dominance as a global technology export leader, including in industrial machinery, for the next twenty years, according to research by HSBC.

  • U.S. Dominance in Technology Exports to Remain Strong
  • Wholesalers/retailers, manufacturers most optimistic
  • U.S. to remain global leader in technology exports for next two decades

Follow up:

However, to maintain its supremacy, the U.S. will need to increase research and innovation investment, according to data from the latest HSBC Global Connections Trade Report, which includes the short-term trade trends from the HSBC Trade Confidence Index and mid- and long-term trade outlook from the HSBC Trade Forecast.

U.S. wholesalers/manufacturers most optimistic about stronger trade flows

The U.S. HSBC Trade Confidence Index rose to 115 from 114 six months earlier, the highest level since its inception, and higher than the global average of 113, driven by stronger global demand and increased private sector confidence. The index is an international survey of small and middle market businesses engaged in cross-border trade including around 250 in the U.S. Unexpectedly strong recovery in leading industrialized nations, including the U.S., has boosted global trade confidence, according to the report.

U.S. wholesalers, retailers and manufacturers were the most optimistic about the six month trade outlook with more than 70 percent of these sector leaders expecting stronger trade flows. Other key findings include:

  • Two thirds of U.S. respondents expect trade volumes to rise in the next six months

  • 50 percent cited increased global demand and improved economic conditions in key industries, including manufacturing, as key drivers of the increased business.

  • Most U.S. business leaders still see Asia as the most promising export region (33 percent), followed by Latin America (28 percent).

  • Within Asia, Vietnam and Korea are the fastest growing destinations for U.S. exports in the near term; China is expected to be the market with the greatest upside potential over the longer term.

  • Canada, Mexico and China are expected to continue to rank as the top destinations for U.S. exports for the next two decades, with Korea and Brazil rounding out the top five.

Said Steve Bottomley, HSBC Group General Manager, Senior Executive Vice President and Head of Commercial Banking for HSBC in North America:

The U.S. has a highly educated workforce, advanced technology and high R&D investment rates. And with high demand growth in emerging markets longer term, U.S. businesses and exporters should greatly benefit.

U.S. to remain global leader in technology exports over the next 20 years

In fact, U.S. technology-intensive exports will grow faster than total U.S. trade over the midterm, and the U.S. is expected to retain its position as a top technology goods exporter for the next two decades, third highest among 25 countries included in the forecast. However, emerging markets are rapidly increasing R&D investment to capture more of the value of their merchandise exports, and the U.S. still has room to improve its R&D spending, which currently ranks below Japan and Korea, according to the report. Said Prabhat Vira, Regional Head of Global Trade and Receivables Finance in North America for HSBC:

As an owner of the intellectual property of high value goods, the U.S. and other developed economies currently dominate the global technology export market, but under-investment in R&D over the long term can pose a competitive threat. The world economy is becoming more knowledge-intensive and for the U.S. to retain its lead, it’s crucial that businesses continue to invest in research and innovation.

Technology goods are products such as office and automatic data-processing machines, telecommunications equipment, electrical machinery and appliances, and photographic apparatus and optical goods. Technology is essential for maintaining and enhancing standards of living, promoting business investment and supporting economic development.

Other trade findings from the report include:

  • Technology-intensive goods are expected to account for 17 percent of the total growth in U.S. export goods for the remainder of the decade.

  • Globally, trade in high-tech goods will outpace growth in total merchandise exports, increasing its share of total goods traded from 22 percent in 2013 to over 25 percent by 2030.

  • HSBC forecasts U.S. trade growth of six percent annually from 2014 to 2016.

  • HSBC forecasts global trade growth of eight percent annually to 2030.

  • U.S. exports will be driven primarily by industrial machinery, followed by transport equipment and scientific apparatus.

  • On the import front, industrial machinery, transport and information, communications and technology equipment are expected to top U.S. imports for the foreseeable future.

[click on image to read the full report]

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