Stagnation in Europe and cooling growth in China may reduce exports of American-made goods, which have been contributing to growth in the world’s largest economy. At the same time, domestic demand will help sustain the pace of imports, making further improvement in the trade balance more difficult.
“Trade is not going to be a big swing factor for U.S. growth,” said Jonathan Basile, an economist at Credit Suisse in New York. “Exports will be less of an area of strength as other parts of the world are slowing down.”
The Commerce Department will release the trade gap figures at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from $45.5 billion to $53 billion.
Cheaper oil probably helped reduce the value of U.S. imports. The average price of Brent crude traded on the ICE Futures Europe exchange in London was $120.49 in April, down 4.5 percent from this year’s high of $126.22 on March 13.
Exports, which climbed to a record in March, have yet to slow because of Europe’s stagnant economy. The 17-nation euro area will shrink 0.1 percent in 2012 and expand 0.9 percent in 2013, the Organization for Economic Cooperation and Development said on May 22, when it trimmed its forecast. By contrast, the OECD raised projections for U.S. growth, to 2.4 percent in 2012 and 2.6 percent next year.
“The situation in Europe poses significant risks to the U.S. financial system and economy and must be monitored closely,” Federal Reserve Chairman Ben S. Bernanke said yesterday in testimony to Congress in Washington.
China, the world’s second-biggest economy, is cooling. It grew 8.1 percent in the first quarter of 2012 from a year earlier, the fifth straight deceleration. The country yesterday cut borrowing costs for the first time since 2008 and loosened controls on banks’ lending and deposit rates, stepping up efforts to combat a deepening slowdown as Europe’s debt crisis worsens.
DuPont Co., the most valuable U.S. chemical producer, is among companies watching the situation in Europe. DuPont’s first-quarter earnings exceeded analysts’ estimates as its agriculture unit benefited from rising corn-seed demand in Brazil and an early spring in the U.S. and Europe.
In “Europe the macro trends are not good right now,” Nicholas Fanandakis, chief financial officer of Wilmington, Delaware-based DuPont, said in a June 6 conference call with analysts. “The economy is in a state of flux. Where it’s going to come out in the end is anyone’s guess.” Even so, the picture is mixed, with parts of the agriculture business “very strong” and “the industrial side not as strong,” he said.
Slowing global growth has hurt shares of equipment makers. The Standard & Poor’s Supercomposite Machinery Index, which includes companies like Caterpillar Inc. and Deere & Co., is up 1.9 since the beginning of the year, lagging a 4.6 percent gain for the broader S&P 500 Index over the same period.
The recent pickup in the value of the U.S. currency may make America’s exports less competitive. The dollar has climbed about 5 percent from this year’s low in February against a trade-weighted basket of currencies from the country’s biggest trading partners, according to Federal Reserve data.
The Treasury Department will continue to “closely monitor” the pace of yuan appreciation, according to its semi- annual report to Congress on exchange-rate policies released May 25. It will also push for “policy changes that yield greater exchange-rate flexibility,” the report said.
Bloomberg Survey ================================== Trade Balance $ Blns ================================== Date of Release 06/08 Observation Period April ---------------------------------- Median -49.5 Average -49.4 High Forecast -45.5 Low Forecast -53.0 Number of Participants 73 Previous -51.8 ---------------------------------- 4CAST -48.5 ABN Amro -49.8 Action Economics -48.5 Ameriprise Financial -49.3 Banca Aletti -49.0 Barclays -49.5 BBVA -49.0 BMO Capital Markets -48.0 BNP Paribas -48.5 BofA Merrill Lynch -52.5 Briefing.com -49.9 Capital Economics -51.0 CIBC World Markets -50.5 Citi -48.0 ClearView Economics -50.5 Comerica -48.0 Commerzbank AG -51.0 Credit Agricole CIB -49.3 Credit Suisse -50.0 Daiwa Securities America -52.5 DekaBank -50.0 Desjardins Group -47.5 Deutsche Bank Securities -50.0 DZ Bank -48.5 Exane -50.5 Fact & Opinion Economics -49.5 First Trust Advisors -50.6 FTN Financial -52.2 Goldman, Sachs & Co. -48.5 Helaba -48.5 High Frequency Economics -48.0 HSBC Markets -49.5 Hugh Johnson Advisors -51.6 IDEAglobal -48.0 IHS Global Insight -48.0 Informa Global Markets -49.3 ING Financial Markets -49.0 Insight Economics -48.0 Intesa Sanpaulo -49.5 J.P. Morgan Chase -48.0 Janney Montgomery Scott -49.2 Jefferies & Co. -48.8 Landesbank Berlin -51.0 Market Securities -49.5 Mizuho Securities -50.5 Moody’s Analytics -48.3 Morgan Stanley -49.8 National Bank Financial -50.0 Natixis -49.5 Nomura Securities -51.0 Nord/LB -50.5 O’Sullivan -46.5 Parthenon Group -49.3 Pierpont Securities -45.5 PNC Bank -53.0 Raiffeisenbank International -51.0 Raymond James -50.0 RBC Capital Markets -49.9 RBS Securities -49.0 Scotiabank -49.6 SMBC Nikko Securities -50.5 Societe Generale -46.3 Standard Chartered -49.5 Stone & McCarthy Research -50.5 TD Securities -49.0 UBS -49.5 UniCredit Research -48.5 Union Investment -48.0 University of Maryland -48.2 Wells Fargo & Co. -50.7 WestLB AG -48.5 Westpac Banking Co. -52.0 Wrightson ICAP -48.0 ==================================
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