Trade Deficit in U.S. Widens as Imports Hit High

The trade deficit in the U.S. widened in January to the largest since October 2008 as imports rose to a record high.

The gap increased 4.3 percent to $52.6 billion, more than forecast, from a revised $50.4 billion in December, the Commerce Department in Washington said today. The median estimate of economists surveyed by Bloomberg News called for a deficit of $49 billion in January. Exports of capital goods, as well as cars and automobile parts, climbed to a record.

Imports may keep rising as labor market gains put consumers in a better position to continue spending while businesses rebuild stockpiles and replace outdated equipment. Rising energy costs may also keep the trade gap widening.

“The increase in imports reflects the strengthening in consumer spending on cars and trucks, so it looks like it’s promising for autos,” said Omair Sharif, a U.S. economist at RBS Securities Inc. in Stamford, Connecticut, who had the closest forecast. At the same time, he said, “U.S. exporters are looking pretty good right now. Exports have been a hefty part of this recovery.”

Stock-index futures held gains after the trade and unemployment figures were released. Standard & Poor’s 500 futures expiring in June added 0.3 percent to 1,364.80 at 8:43 a.m. New York time. The yield on the benchmark 10-year Treasury note rose to 2.05 percent from 2.01 percent late yesterday.

The median forecast in the Bloomberg News survey of 79 economists called for the deficit to rise from a previously estimated $48.8 billion in December. Estimates for January ranged from gaps of $46.5 billion to $51 billion.

Petroleum Imports

The cost of petroleum imports in January slid to $17.2 billion from $17.4 billion the previous month.

Overall imports in January advanced 2.1 percent to $233.4 billion. In addition to petroleum, Americans also bought more capital goods such as computer accessories and telecommunications equipment from overseas.

Exports increased 1.4 percent to $180.8 billion, boosted by aircraft sales and computers to buyers overseas. That caused the trade gap excluding petroleum to narrow to $22.9 billion in January from $23.2 billion the prior month. The rise in exports of cars and parts may reflect a new method for calculation by the Commerce Department.

Some U.S. exporters are betting on increased demand from abroad. Deere & Co., (DE) the world’s largest maker of agricultural machinery, said last week it will invest $70 million to expand tractor production in Waterloo, Iowa.

The investment will increase capacity by more than 10 percent by mid-2013, the Moline, Illinois-based company said in a statement. Deere’s Waterloo operations build large farm tractors that are shipped to more than 130 countries, the company said.

After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit grew to $49.1 billion from $48.3 billion.

The fourth-quarter average of $50.2 billion was larger than the $47 billion in the previous three months.

Annual Growth

The world’s largest economy expanded at a 3 percent annual rate in the fourth quarter after growing at a 1.8 percent pace in the prior three months, Commerce Department figures showed on Feb. 29. The trade gap subtracted 0.07 percentage point from GDP in the final three months of 2011, after adding 0.43 points in the prior quarter.

The January trade gap with China widened to $26 billion from $23.1 billion as imports climbed, today’s report showed.

Exports to the European Union decreased 7.5 percent and imports fell 8.7 percent, shrinking the trade gap to $8.5 billion from $9.6 billion.

Caterpillar Inc. (CAT), based in Peoria, Illinois, is building and expanding factories as demand for trucks and shovels used in mines rises and old equipment is replaced in the U.S. and Europe. The world’s largest maker of construction and mining equipment said it will build a one-million-square-foot factory in Georgia, which will employ 1,400 workers. The plant, which will make small tractors and excavators, will support an additional 2,800 positions in the U.S. at suppliers and supporting companies.

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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

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