Global trade is stalling, dimming prospects that exports will buoy the U.S. economy in the coming months. Trade rebounded after its collapse in the recession. Now several indicators of export activity are flashing red as Europe's recession, anemic U.S. growth and the slowing Chinese economy damp exports world-wide.

The World Trade Organization just projected the global volume of trade in goods would expand only 2.5 percent this year, down from 5 percent last year and nearly 14 percent growth in 2010. A Dutch government agency, the CPB Netherlands Bureau for Economic Policy Analysis, estimates it fell outright in June and July.

The trade shift could take a particularly big toll on the U.S. economy. More U.S. companies may downgrade their global growth estimates in the coming weeks as they prepare to report earnings from the third quarter, which ended Sunday. FedEx Corp. and Caterpillar Inc. already have downgraded their global outlooks.

The trade slowdown could worsen as momentum slips across the global economy. The International Monetary Fund is lowering its forecast for global economic growth to just over 3 percent this year, according to projections to be released at its annual meeting in Tokyo next week.
Europe is the epicenter of the weakness radiating through the global economy. Chinese exports to the European Union—until last year its largest export market—have fallen 5 percent so far this year through August.

Weak exports have exacerbated a slowdown in China's domestic economy, which economists project will grow around 7.5 percent this year, which would be the weakest annual expansion since 1990.

China's manufacturing sector contracted for the second straight month in September, the government reported Monday, underscoring the troubles in the world's second-largest economy. A separate HSBC/Markit survey of China's manufacturers released Saturday found orders for new exports in September hit a 42-month low.

This slowdown is curbing exports to China from other Asian countries, such as Singapore and Thailand, which provide components for goods that end up in the hands of European consumers. Japanese exports to Europe also are tumbling.

U.S. exports to the European Union fell in July after largely holding up for two years, while overall export growth slowed to a trickle this summer. The Port of Los Angeles, the nation's largest, said the volume of loaded outbound containers fell 10.5 percent in August from a year earlier.

U.S. manufacturers' new export orders declined for three straight months through August, ending three straight years of expansion, according to a survey from the Institute for Supply Management. The purchasing managers' group's latest report, due out on Monday, is expected to show continued weakness.

Read more in The Wall Street Journal.