Trade Gap in U.S. Widens More Than Forecast as Imports Jump

The trade deficit widened more than forecast in March as American demand for crude oil, computers, automobiles and televisions propelled imports to a record.

The gap grew 14 percent to $51.8 billion, the Commerce Department reported in Washington today. The median estimate of economists surveyed by Bloomberg News called for an increase to $50 billion. A 5.2 percent jump in imports, the biggest in more than a year, swamped the 2.9 percent gain in exports, which also reached a record.

The pickup in the value of imports reflected higher fuel prices and a bounce back in shipments from China following the week-long Lunar New Year celebrations amid increasing consumer spending. Sales by American companies to counterparts in Mexico, the European Union and South Korea reached the highest ever, giving no indication of a slowdown in global demand.

“It’s hard to get nervous that imports are rising,” said Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York. “It does suggest that consumer demand is strong.”

Maki said exports “don’t suggest the slowdown in Europe is having a dramatic effect on growth” in the U.S.

Other reports today showed claims for jobless benefits dropped last week to the lowest level in a month, and the costs of imported goods decreased in April.

Applications for unemployment benefits fell by 1,000 to 367,000 in the period ended May 5, in line with the median forecast in a Bloomberg survey and the lowest since the end of March, figures from the Labor Department showed.

Import Prices

The import-price index declined 0.5 percent following a revised 1.5 percent advance in March, Labor Department data also showed. Economists projected the gauge would drop 0.2 percent, according to the median forecast in a Bloomberg survey. Prices minus fuel climbed 0.1 percent.

Stock-index futures held earlier gains after the reports. The contract Standard & Poor’s 500 Index maturing in June rose 0.7 percent to 1,360 at 9 a.m. in New York.

The median forecast in the Bloomberg survey of 75 economists called for the deficit to grow from a previously estimated $46 billion in February. Projections for March ranged from gaps of $45 billion to $54 billion. The Commerce Department revised the February gap down to $45.4 billion.

The advance in March brought the value of imports up to $238.6 billion and followed a 2.8 percent drop in February that was the biggest in at least three years.

Imports from China

Imports from China climbed 12 percent in March after plunging the prior month as the Lunar New Year holidays extended into early February. The March trade gap with China widened to $31.5 billion from $28.1 billion, today’s report showed.

During a trip to China last week Treasury Secretary Timothy F. Geithner hailed a strengthening in economic ties. There was little evidence of tensions over exchange-rate policy, with Geithner in his closing remarks calling Chinese moves toward a more flexible currency “significant and promising” and likely to lead to gains against the dollar and other major currencies.

He also said that Chinese authorities were “intervening less in exchange markets” and progress in economic and financial changes in the nation is translating into “opportunities for U.S. workers and companies.”

The cost of crude oil imports in March increased to $29.2 billion from $23.4 billion the previous month, reflecting higher prices and an increase in volumes, today’s report showed.

The increase in imports was broad-based with demand for foreign-made computers, telecommunications gear, automobiles and parts, televisions, cellular phones and clothing all picking up.

More Exports

The value of exports increased to $186.8 billion from $181.5 billion in February as foreign demand for fuel oil, chemicals, aircraft engines, drilling equipment and generators improved.

The value of the dollar may continue to underpin exports. It’s down 3.3 percent against a trade-weight basket of currencies from the country’s largest trading partners in the two year through May 4, according to Federal Reserve data.

The trade gap “will likely trend lower in coming years because of improved U.S. competitiveness,” Benjamin Reitzes, a senior economist at BMO Capital Markets in Toronto, said before the report.

Patriot Coal Corp (PCX) is among companies looking for opportunities abroad.

Growth Overseas

“While the domestic market remains difficult, it is important to note that international thermal coal markets remain open to U.S. coals,” said Richard Whiting, president and chief executive officer, in a May 8 earnings call. “We expect to ship between 6 and 7 million tons of thermal coal overseas in 2012, including cargoes to both Europe and Asia. This represents nearly a doubling in thermal exports from the 3.8 million tons we shipped overseas in 2011.”

The surge in U.S. exports is at odds with other reports that have shown slower global growth and as the European debt crisis limited sales at companies like Caterpillar Inc. and United Technologies Corp.

Caterpillar, the world’s largest maker of construction equipment, on April 25 reported a gain in first-quarter revenue that was smaller than analysts estimated after sales fell in China and Brazil. The Peoria, Illinois-based company said demand in developing nations this year will be lower than anticipated, a reversal after 2011 growth in Latin America and the Asia-Pacific region outpaced North America.

After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit grew to $48.9 billion in March from $44.1 billion, today’s report showed.

The world’s largest economy expanded at a 2.2 percent annual rate in the first three months of the year, the Commerce Department reported last month. The trade gap as initially reported had little effect on growth after subtracting 0.3 point in the prior quarter.

To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net

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

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