Trade Gap in U.S. Probably Narrowed in July as Imports Slowed
Trade Gap Probably Narrowed in July as Imports Slowed
Patrick Semansky/Bloomberg
A shipping container is lifted at the Port of South Louisiana in Reserve, Louisiana.
A shipping container is lifted at the Port of South Louisiana in Reserve, Louisiana. Photographer: Patrick Semansky/Bloomberg
The U.S. trade deficit probably narrowed in July as a slowing recovery prompted Americans to buy fewer goods from abroad, economists said before a government report today.
The gap between imports and exports decreased to $47 billion from $49.9 billion the prior month, according to the median of 73 estimates in a Bloomberg News survey. A separate report may show initial jobless claims fell to a level that shows firings remain elevated.
Demand for overseas products may cool as American consumers and businesses curb spending in coming months, while growing foreign economies help support demand for U.S.-made goods. Exports will probably be a source of strength for manufacturing as the world’s largest economy tries to sustain a recovery from the worst recession since the 1930s.
“We would expect exports to continue to do well in the months ahead,” said Jay Bryson, global economist for Wells Fargo Securities LLC in Charlotte, North Carolina. In the U.S., “there was restocking in the spring and that brought in a bunch of imports. At some point over the next few months some of that demand falls off.”
The Commerce Department is scheduled to release the trade report at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from a gap of $43 billion to one of $52 billion.
The Labor Department will release its jobless claims report at the same time. Economists forecast claims declined by 2,000 to 470,000 last week, according to the median projection in a Bloomberg survey. The level compares with a 465,000 average this year and shows employment is stagnating.
Second-Quarter Growth
The trade deficit swelled by a record $7.9 billion in June. A wider-than-estimated gap for the month was part of the reason the Commerce Department on Aug. 27 revised down its estimate for second quarter growth to a 1.6 percent annual rate from the previously projected 2.4 percent. A final estimate for the quarter will be released Sept. 30.
Signs companies are slowing the pace of inventory building and investment in new equipment indicate a cooling of demand for goods made abroad. Orders placed with U.S. factories for business equipment fell 7.2 percent in July, a Sept. 2 Commerce Department report showed. Sales of such goods were down 1 percent.
While smaller gains in business spending may help limit imports to the U.S., the outlook for exports is holding up. A report last week showed manufacturing in China grew at a faster pace in August. The gain in the government-backed purchasing managers’ index signaled the economy in China is stabilizing after slowing.
Caterpillar Adding
Caterpillar Inc., based in Peoria, Illinois, said last month it may add as many as 9,000 workers worldwide this year as sales climb in developing markets. The world’s largest construction equipment maker said about 1,250 of the jobs the company has added so far have been in the U.S.
Shares of manufacturers have held up better than the broader market since the world’s largest economy showed signs of cooling. The Standard & Poor’s Supercomposite Machinery Index, which includes Caterpillar and Deere & Co., has climbed 15.7 percent this year through yesterday, compared with a 1.5 percent drop in the S&P 500.
Manufacturing unexpectedly expanded at a faster pace in August as production picked up, a report from the Institute for Supply Management showed last week. At the same time, the group’s services index fell in August to the lowest level in seven months.
‘Uneven Recovery’
“What I see is an uneven recovery,” Bob McDonald, chief executive officer of Procter & Gamble Co., the world’s largest household-products maker, said in a Sept. 3 interview with Bloomberg Television. “What I see when I look at our consumer data is the U.S. economy is improving, the global economy is improving, and what we’d like to do is accelerate the rate of growth.”
Public opinion polls show jobs and the economy are top concerns among voters two months before November congressional elections in which the Democrats are at risk of losing their majorities in the House of Representatives and the Senate.
President Barack Obama’s approval ratings have slipped and support for the Republican Party has grown amid signs the economy was cooling.
Obama wants Congress to extend middle-income tax cuts, while letting the top tax rates rise. He’s endorsed only an extension of tax cuts for those earning less than $200,000 per individual or $250,000 per couple.
The 3.8 million filers who fall in the $200,000 to $500,000 income range would pay $2 billion more in 2011 taxes, or an average of $532, according to a study by the nonpartisan congressional Joint Committee on Taxation.
Bloomberg Survey
====================================================
Trade Initial Cont.
Balance Claims Claims
$ Blns ,000’s ,000’s
====================================================
Date of Release 09/09 09/09 09/09
Observation Period July 28-Aug 21-Aug
----------------------------------------------------
Median -47.0 470 4450
Average -47.3 470 4444
High Forecast -43.0 482 4485
Low Forecast -52.0 460 4400
Number of Participants 73 46 14
Previous -49.9 472 4456
----------------------------------------------------
4CAST Ltd. -44.3 475 ---
ABN Amro Bank -44.9 465 ---
Action Economics -46.5 467 4475
Aletti Gestielle SGR -49.4 480 ---
Ameriprise Financial Inc -48.5 465 4450
Banesto -47.3 470 ---
Bank of Tokyo- Mitsubishi -48.6 --- ---
Barclays Capital -48.0 465 ---
BBVA -48.3 475 4440
BMO Capital Markets -50.0 470 ---
BNP Paribas -49.5 475 ---
Briefing.com -46.5 475 4450
Capital Economics -45.0 --- ---
CIBC World Markets -46.8 --- ---
Citi -46.0 470 4450
ClearView Economics -47.0 --- ---
Commerzbank AG -47.0 465 ---
Credit Agricole CIB -48.0 --- ---
Credit Suisse -46.0 470 ---
Daiwa Securities America -43.0 --- ---
DekaBank -47.0 --- ---
Desjardins Group -46.0 470 ---
Deutsche Bank Securities -50.0 465 ---
Deutsche Postbank AG -47.0 --- ---
DZ Bank -47.5 --- ---
Exane -47.0 --- ---
First Trust Advisors -49.5 466 ---
FTN Financial -48.0 --- ---
Goldman, Sachs & Co. -48.0 --- ---
Helaba -45.0 475 ---
High Frequency Economics -45.0 472 ---
HSBC Markets -46.5 480 ---
Hugh Johnson Advisors -44.0 --- ---
Ibersecurities -47.8 --- ---
IDEAglobal -46.5 460 ---
IHS Global Insight -47.0 --- ---
Informa Global Markets -50.2 480 4485
ING Financial Markets -47.0 --- ---
Insight Economics -47.5 465 4400
Intesa-SanPaulo -45.0 --- ---
J.P. Morgan Chase -49.5 465 ---
Janney Montgomery Scott -48.7 --- ---
Jefferies & Co. -46.0 482 ---
Landesbank Berlin -43.5 460 ---
Maria Fiorini Ramirez --- 465 ---
MF Global -46.5 475 ---
MFC Global Investment -49.0 465 4445
Mizuho Securities -49.0 480 ---
Moody’s Analytics -47.3 465 4400
Morgan Keegan & Co. -48.2 --- ---
Morgan Stanley & Co. -46.0 470 ---
National Bank Financial -47.9 --- ---
Natixis -49.4 --- ---
Nomura Securities Intl. -47.0 --- ---
Nord/LB -48.5 470 ---
Pierpont Securities LLC -44.8 465 ---
PineBridge Investments -47.5 --- ---
PNC Bank -47.0 --- ---
Raiffeisen Zentralbank -46.0 --- ---
Raymond James -48.3 460 ---
RBC Capital Markets -46.7 470 ---
Scotia Capital -51.0 465 4420
Societe Generale -46.0 --- ---
Standard Chartered --- 470 4430
State Street Global Markets -46.7 469 4454
Stone & McCarthy Research -46.7 475 ---
TD Securities -47.0 470 ---
Thomson Reuters/IFR -48.0 470 4460
UBS -46.5 470 ---
University of Maryland -52.0 470 ---
Wells Fargo & Co. -47.5 --- ---
WestLB AG -47.5 --- ---
Westpac Banking Co. -50.1 475 ---
Woodley Park Research -44.4 --- ---
Wrightson ICAP -48.5 475 4450
====================================================
To contact the reporters on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net
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