Trade Gap in U.S. Probably Grew in December

The trade deficit in the U.S. probably widened in December to a six-month high as imports outpaced exports, economists said before a report today.

The gap grew to $48.5 billion from the $47.8 billion shortfall in November, according to the median of 75 estimates in a Bloomberg News survey. A separate report may show consumer sentiment in February held close to an 11-month high.

Imports may keep rising this year as an improving job market underpins consumer spending, and businesses rebuild inventories and replace outdated equipment. At the same time, demand from emerging markets is boosting sales at companies like General Electric Co. (GE) and Caterpillar Inc. (CAT), buffering the fallout from Europe’s debt crisis and helping to sustain exports.

“Domestic demand may pick up while growth in the rest of the world is not so dynamic,” said Harm Bandholz, chief U.S. economist at Unicredit Group in New York. “We’ll probably see a widening of the trade deficit in the first half of the year as imports rise faster and exports don’t keep pace.”

The Commerce Department’s trade figures are scheduled for release at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from gaps of $50.5 billion to $43 billion.

The U.S. was picking up heading into 2012. The world’s largest economy expanded at a 2.8 percent annual rate in the fourth quarter after a 1.8 percent pace in the prior three months, Commerce Department figures showed on Jan. 27.

Signs the economy was improving have helped boost shares. The Standard & Poor’s 500 Index has climbed 7.5 percent so far this year through yesterday.

Oil Imports

Rising oil costs may be one reason why imports will probably keep growing in early 2012. The price of Brent crude traded on the ICE Futures Europe exchange in London was $118.63 yesterday, up 10 percent from $107.38 at the end of December.

At the same time, exporters may also continue to see gains. Caterpillar, the largest construction and mining equipment maker, posted fourth-quarter profit that beat analysts’ estimates and said prospects for global growth have improved. It also projects more orders as pent-up demand is released and customers replace older products.

“We’re expecting 2012 to be another year of good growth,” Doug Oberhelman, chairman and chief executive officer of the Peoria, Illinois-based company, said in a Jan. 26 statement. “2011 was a record-breaking year for U.S. exports,” which “supported thousands of jobs in the United States.”

China, the world’s second-biggest economy, expanded 8.9 percent in the fourth quarter from a year earlier, exceeding the Bloomberg survey median forecast. An index of India’s services industry rose in January at the fastest pace in six months, and manufacturing accelerated.

‘Strong’ Markets

“The emerging markets continue to be very strong,” Jeffrey Immelt, chief executive officer of General Electric, said on a Jan. 20 conference call with investors. “There are a few challenged markets like Europe and appliances, but on balance, we have a positive outlook.”

A weaker dollar will help keep U.S. goods competitive. Since a recent high on Dec. 14, the dollar has declined 3.4 percent against a trade-weighted basket of currencies from the country’s biggest trading partners.

The trade deficit with China remains a thorny issue as the U.S. presses the Asian country to allow its currency, the yuan, to rise against the dollar. President Barack Obama, in his State of the Union address, said last month he is creating a trade enforcement group that would use investigators and other federal resources to combat unfair trade practices by nations including China.

At 9:55 a.m. in New York, the Thomson Reuters/University of Michigan will issue its preliminary February index of consumer sentiment. Economists project a gauge of 74.8, little changed from the 75 final reading a month earlier, according to the median forecast in the Bloomberg survey.

              Bloomberg Survey

=============================================
                             Trade  U of Mich
                           Balance    Conf.
                            $ Blns    Index
=============================================
Date of Release              02/10    02/10
Observation Period            Dec.   Feb. P
---------------------------------------------
Median                       -48.5     74.8
Average                      -48.1     74.7
High Forecast                -43.0     79.5
Low Forecast                 -50.5     71.0
Number of Participants          75       71
Previous                     -47.8     75.0
---------------------------------------------
4CAST                        -49.0     73.0
ABN Amro                     -48.0     75.0
Action Economics             -49.0     77.0
Aletti Gestielle             -48.8     73.0
Ameriprise Financial         -49.0     75.5
Banca Aletti                 -48.8     73.0
Banesto                      -48.6     74.5
Bantleon Bank AG              ---      73.5
Barclays Capital             -48.5     73.5
Bayerische Landesbank        -49.5     75.0
BBVA                         -48.0     74.0
BMO Capital Markets          -47.8     73.0
BNP Paribas                  -49.0     77.0
BofA Merrill Lynch           -47.5     74.0
Briefing.com                 -48.0     75.5
Capital Economics            -49.0     73.0
CIBC World Markets           -48.2     ---
Citi                         -48.0     76.5
ClearView Economics          -47.5     76.0
Comerica                     -48.5     ---
Commerzbank AG               -49.5     ---
Credit Agricole CIB          -48.8     76.0
Credit Suisse                -47.0     73.0
Daiwa Securities America     -48.0     76.0
Danske Bank                   ---      74.8
DekaBank                     -47.0     75.0
Desjardins Group             -48.9     72.5
Deutsche Bank Securities     -47.5     77.0
Deutsche Postbank AG         -47.0     74.5
DZ Bank                      -48.4     75.2
Exane                        -48.5     75.0
Fact & Opinion Economics     -43.0     78.0
First Trust Advisors         -46.3     75.0
FTN Financial                -48.7     75.0
Helaba                       -48.0     74.0
Herrmann Forecasting         -49.6     76.6
High Frequency Economics     -46.0     77.0
HSBC Markets                 -46.2     74.0
Hugh Johnson Advisors        -45.0     76.0
IDEAglobal                   -49.0     76.0
IHS Global Insight           -48.5     76.0
Informa Global Markets       -48.8     73.6
ING Financial Markets        -47.0     74.0
Insight Economics            -47.0     76.0
Intesa Sanpaulo              -47.5     74.0
J.P. Morgan Chase            -47.5     74.5
Janney Montgomery Scott      -49.0     ---
Landesbank Berlin            -50.5     73.0
Landesbank BW                -46.2     74.0
Manulife Asset Management     ---      77.0
Market Securities            -49.0     ---
Mizuho Securities            -48.5     75.0
Moody’s Analytics            -49.7     75.0
Morgan Keegan & Co.          -48.7     ---
National Bank Financial      -47.0     75.0
Natixis                      -49.3     74.5
Nomura Securities            -47.5     ---
Nord/LB                      -48.5     75.5
OSK Group/DMG                 ---      74.8
O’Sullivan                   -49.2     75.0
Pierpont Securities          -48.7     76.5
PineBridge Investments       -44.5     73.0
PNC Bank                     -46.5     71.0
Raiffeisenbank International -47.5     74.0
Raymond James                -49.3     74.0
RBC Capital Markets          -47.3     73.0
RBS Securities               -48.5     76.0
Scotia Capital               -47.5     75.5
SMBC Nikko Securities        -49.5     72.0
Societe Generale             -49.5     79.5
Standard Chartered           -49.0     73.5
Stone & McCarthy Research    -50.0     74.5
TD Securities                -46.0     73.1
UBS                          -47.0     73.5
UniCredit Research           -48.5     73.5
University of Maryland       -49.0     74.0
Wells Fargo & Co.            -49.0     ---
Westpac Banking Co.          -48.0     73.5
Wrightson ICAP               -50.0     76.0
=============================================

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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