Exports from the U.S. climbed to a record in September, contributing to an unexpected decline in the trade deficit that gave the world’s largest economy a boost at the end of the third quarter.
The gap shrank 5.1 percent to $41.5 billion, the smallest since December 2010 and lower than any estimate in a Bloomberg survey of economists, Commerce Department figures showed today in Washington. The gain in sales to overseas buyers was broad- based, with improvement in everything from soybeans to fuel and civilian aircraft.
Growing demand from emerging markets in South and Central America may be helping to overcome a slowdown in Europe and China that is hurting companies such as Emerson Electric Co. (EMR) At the same time, U.S. consumers are spending more as the job market stabilizes, boosting the inflow of goods made abroad as retailers restock in advance of the year-end holidays.
“The outlook in emerging markets is stronger than in Europe, and that’s where we would expect to see export growth,” said Jeremy Lawson, senior U.S. economist at BNP Paribas in New York, who projected the gap would decline to $42 billion, matching the lowest among economists surveyed. “Consumer goods imports were strong. Some of that may be in preparation for holiday shopping. The picture is getting better there.”
The improvement in trade may boost third-quarter growth by 0.4 percentage point, according to economists at JPMorgan Chase & Co. in New York. Combined with prior data showing a pickup in construction and in inventories, the JPMorgan analysts now project the economy expanded at a 2.8 percent annual rate in July through September, up from an initial Commerce Department estimate of 2 percent.
Other reports showed fewer Americans filed claims for jobless benefits last week, and consumer sentiment climbed as more households said the economy was improving.
Stocks declined, sending the Standard & Poor’s 500 Index to the lowest level since August, amid concern about delays in sending aid to Greece. The 500 Index fell 1.2 percent to 1,377.51 at the close in New York.
Internationally, the Bank of England stopped expanding its bond-buying program, indicating officials may shift to stimulating bank lending to support the economy.
Applications for jobless insurance payments in the U.S. fell by 8,000 to 355,000 in the week ended Nov. 3, figures from the Labor Department showed today. A government spokesman said the data are starting to show mixed influence as a result of superstorm Sandy.
One state said the loss of electricity due to the storm suppressed filings, while others said workers who lost their jobs as a result of the weather were starting to apply, the Labor Department analyst said. The analyst declined to identify the state, saying it was department policy not to name individual states.
It may take three to four weeks to see the full impact, the spokesman said, which indicates claims may jump back in coming weeks as more storm-related applications are processed. A Labor Department report last week showed the economy added more jobs than projected in October and the unemployment rate rose as hundreds of thousands of Americans joined the job search amid improving prospects.
“When you see bad weather, there’s usually a drop in claims, and then you typically see a rebound in the next few weeks,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, who correctly forecast the number of filings. “Underneath the surface, job destruction has been trending very low. Layoffs aren’t the problem -- it’s the relatively weak pace of job creation.”
Also today, the Bloomberg Consumer Comfort Index rose to minus 34.4 in the period ended Nov. 4, the best reading since April, from minus 34.7 the previous week. Twenty percent of those surveyed had a positive view of the economy, the most since March 2008.
Improving sentiment may further invigorate household spending and propel retailers like Macy’s Inc. ahead of the year-end holidays. The end of the contentious presidential race, combined with an improving job market, may continue to boost confidence even as the lingering effects of superstorm Sandy limit any short-run rebound, according to Joseph Brusuelas, a senior economist at Bloomberg LP in New York.
The median forecast in a Bloomberg survey of 75 economists called for the trade deficit to expand to $45 billion. Estimates ranged from a gap of $42 billion to $47.6 billion. The Commerce Department revised the August deficit to $43.8 billion from an initially reported $44.2 billion.
Exports climbed 3.1 percent in September, the biggest gain since July 2011, to $187 billion. Sales of foods and feeds increased by $1.14 billion, and demand for industrial supplies such as petroleum products and fuel oil rose by $3.45 billion.
Purchases from customers in South and Central America climbed to a record, pushing the U.S. surplus with the region up to $2.2 billion from $400 million in August.
Exports to the European Union were little changed at $21.3 billion in September before adjusting for seasonal variations.
The euro area’s economy hasn’t expanded since the third quarter of 2011, and the rate of growth in both Canada and China has slowed this year relative to last.
“The pace of growth is unusually weak for this stage of a recovery cycle, and uncertainty in the U.S., China and Europe is resulting in cautious business investment,” Patrick Fitzgerald, director of investor relations at Emerson Electric, said during a Nov. 6 earnings call. “At present, there is no obvious catalyst for economic growth acceleration.”
In the three months-ended September, U.S. sales at the St. Louis-based maker of equipment for power plants and data centers grew 2 percent from a year earlier, and they were little changed in Europe and China.
“The surprising thing is the strength in exports,” said Jay Bryson, global economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “I don’t think it will last given what we are seeing abroad. You have very, very slow growth in Europe, and by Chinese standards there is very slow growth there as well.”
Nonetheless, should those economies turn around, businesses abroad may have an incentive to buy American-made products, which are becoming less expensive as the value of the dollar falls. It was down 3.1 percent on Nov. 2 against a basket of currencies from America’s biggest trading partners after reaching an almost-two-year peak in late July, according to Federal Reserve data. The data also show the dollar has dropped 28.5 percent over the past decade.
Imports increased 1.5 percent to $228.5 billion from $225.2 billion in the prior month, led by demand for mobile phones and fuel products, today’s Commerce Department report showed.
Apple Inc.’s iPhone 5 became available on Sept. 21 in the U.S. and more than 5 million units sold in the first three days, surpassing a record set last year by the previous model. Demand for the new handset exceeded the initial supply, the Cupertino, California-based company said.
The trade gap with China, where parts for the iPhone are manufactured, climbed to $29.1 billion in September from $28.7 billion the prior month.
Imports may keep growing as consumer demand firms, widening the trade gap. Household spending advanced in September by the most since February.
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