Increase in U.S. Imports, Exports Signal Global Pickup

Photographer: Chip Chipman/Bloomberg

A decline in the cost of petroleum that is helping to trim the import bill, combined with sustained job gains, is also boosting the buying power of U.S. households. Close

A decline in the cost of petroleum that is helping to trim the import bill, combined... Read More

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Photographer: Chip Chipman/Bloomberg

A decline in the cost of petroleum that is helping to trim the import bill, combined with sustained job gains, is also boosting the buying power of U.S. households.

The trade deficit unexpectedly widened in November as U.S. imports jumped almost four times more than exports, gains that signal a rebound in global growth.

The gap swelled 15.8 percent to $48.7 billion, the largest since April, Commerce Department data showed today in Washington. The shortfall exceeded all projections in a Bloomberg survey of economists. Imports reflected record demand for consumer goods, while U.S. companies benefitted from more overseas sales of equipment such as telecommunications gear.

American retailers stocked up on foreign-made mobile phones and computers heading into the holidays, showing little concern that the budget impasse in Washington would hurt household spending. Strengthening economies in Asia, combined with a sustained expansion in the U.S., will probably spur orders at companies such as Alcoa Inc. (AA)

“Today’s data confirm that there was some stabilization in November,” said Ryan Wang, an economist at HSBC Securities USA Inc. in New York, who is the third-best trade forecaster over the past two years, according to data compiled by Bloomberg. “There have been some hints from manufacturing surveys that trade and production have improved a bit.”

Stocks were little changed, after the Standard & Poor’s 500 Index rose to a five-year high, as banks slumped amid Wells Fargo & Co.’s results and higher Chinese inflation raised concern officials may curb stimulus. The S&P 500 fell less than 0.1 percent to 1,472.05 at the close in New York.

Elsewhere, the Japanese government will spend $116 billion (10.3 trillion yen) to drive a recovery from a recession in Prime Minister Shinzo Abe’s first major policy initiative to end deflation and spur growth, according to a statement today by the Cabinet Office.

China’s Economy

China’s exports jumped 14.1 percent in December from a year earlier, the most since May, a report showed yesterday. Together with a 19-month high in the pace of China’s manufacturing expansion reported Dec. 31, the figures are boosting optimism that a recovery in the world’s second-biggest economy is gaining traction after a seven-quarter slowdown.

“As we improve and the rest of the world improves, exports and imports are both going to go higher,” said Brian Jones, a senior U.S. economist at Societe Generale in New York, whose forecast of $45 billion was the highest in the Bloomberg survey. “You end up having deterioration in the accounts because I think imports will grow faster than exports.”

Fed’s Plosser

Federal Reserve Bank of Philadelphia President Charles Plosser said today in an interview with Bloomberg Television that the central bank may need to slow or halt bond buying this year as the economy makes “modest progress.”

“Given where we are, I think I would not be surprised if we face the choice of having to rein in the purchases sometime during this year,” Plosser said in the broadcast interview.

The median forecast in a Bloomberg survey of 69 economists projected the deficit would narrow to $41.3 billion. Estimates ranged from gaps of $39.8 billion to $45 billion. October’s deficit was revised from an initially reported $42.2 billion.

Imports increased 3.8 percent to $231.3 billion, the most since April. Purchases of foreign-made autos and parts climbed by $1.51 billion and demand for mobile phones jumped by $1.81 billion, the report showed.

Exports increased 1 percent in November to $182.6 billion, the report showed. The gain was also led by sales of automobiles and parts and telecommunications equipment.

Tracking Estimates

Economists at Barclays Plc, Morgan Stanley and Nomura Securities were among those who trimmed their fourth-quarter tracking estimates after the report. The deficit adjusted for changes in prices, used to calculate gross domestic product, rose to $51.9 billion, the highest since April 2008, from $46 billion.

Nonetheless, the immediate hit to GDP will probably be smaller than the full increase in imports, as purchases of goods made overseas signal a pickup in consumer spending and business investment, which add to growth.

“At this point, it looks as if real GDP growth is more likely to come in around 1.5 percent to 1.75 percent,” RDQ Economics LLC economists John Ryding and Conrad DeQuadros wrote in an e-mail. “However, there is often an offset in a faster inventory build when imports surge, and we will not change our fourth-quarter growth projection until we have the November inventory data in hand.”

The Commerce Department will issue November business inventories statistics on Jan. 15.

Factory Exports

American manufacturers are selling more overseas. The Tempe, Arizona-based Institute for Supply Management said its factory export gauge rose in December to a seven-month high. Commerce Department data show exports slumped in October by the most in almost four years.

Companies such as Alcoa, the largest U.S. aluminum producer, are counting on higher demand from recovering economies led by China.

Alcoa is projecting aluminum prices will rise with “China rebounding, Europe kind of muddling through -- probably a little better than what most people thought -- and the U.S., hopefully avoiding to hit the debt ceiling and growing at the same pace that it has been growing last year,” Chief Executive Officer Klaus Kleinfeld said on a Jan. 8 earnings call.

The November trade data may have also been influenced by port disruptions. Superstorm Sandy made landfall Oct. 29, causing billions of dollars in damage along the East Coast and delaying freight traffic in the region. In addition, clerical workers at the ports of Los Angeles and Long Beach, the largest U.S. port complex, went on strike Nov. 27 for eight days, affecting about $1 billion of trade a day.

Import Prices

A report from the Labor Department today showed prices of goods imported into the U.S. unexpectedly dropped 0.1 percent in December after falling 0.8 percent the prior month. Economists projected the gauge would rise 0.1 percent, according to the median estimate in a Bloomberg survey.

The cost of imported fuel decreased 0.1 percent in December from the prior month. Import prices minus fuel also declined 0.1 percent last month.

For all of 2012, import prices fell 1.5 percent, the first annual drop since they retreated 10.1 percent in 2008.

To contact the reporter on this story: Michelle Jamrisko in Washington at mjamrisko@bloomberg.net

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

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