Trade Deficit in U.S. Widens More Than Forecast on Oil

Photographer: Tim Rue/Bloomberg

A COSCO Pacific Ltd. container ship enters the Port of Long Beach in Long Beach, California. Close

A COSCO Pacific Ltd. container ship enters the Port of Long Beach in Long Beach, California.

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Photographer: Tim Rue/Bloomberg

A COSCO Pacific Ltd. container ship enters the Port of Long Beach in Long Beach, California.

The trade deficit in the U.S. widened more than forecast in January as demand for imported crude oil rebounded.

The gap grew by 16.5 percent to $44.4 billion from $38.1 billion in December that was the smallest in three years, Commerce Department figures showed today in Washington. The median forecast in a Bloomberg survey of 73 economists called for the deficit to increase to $42.6 billion. Exports fell for the first time in three months as sales of fuel oil and gold reversed gains in the prior month.

Sustained spending gains by U.S. consumers and businesses will probably keep driving up imports this year even as oil costs moderate. Overseas purchases of American-made goods, which help to contain the trade gap, will probably also rise as Europe stabilizes and emerging markets including China pick up.

“The overall picture is fairly stable for this year,” said David Sloan, a New York-based senior economist at 4Cast Inc., who projected the trade gap would climb to $44.5 billion. “We should see modest increases in exports. Most of the world is growing.”

The number of Americans who filed for unemployment benefits declined to a six-week low, showing further improvement in the labor market, another report today showed. First-time jobless claims unexpectedly fell by 7,000 to 340,000 in the week ended March 2, the lowest since the period ended Jan. 19, according to data from the Labor Department in Washington. The median forecast of 50 economists surveyed by Bloomberg called for an increase to 355,000.

Shares Climb

Stock-index future rose after the reports. The contract on the Standard & Poor’s 500 Index maturing this month climbed 0.2 percent to 1,542.2 at 8:40 a.m. in New York.

Bloomberg survey estimates ranged from deficits of $38.9 billion to $46.5 billion. The Commerce Department revised the December shortfall from an initially reported $38.5 billion.

In January, imports climbed 1.8 percent to $228.9 billion from $224.8 billion the prior month.

The figures reflected a jump in fuel purchases. The number of barrels of imported crude jumped to 8.41 million, the most since August, from 7.19 million in December. That swamped a decrease in the cost of the fuel to push the value of such imports to $24.5 billion from $21.2 billion.

Excluding petroleum, the trade shortfall was little changed at $20.1 billion, compared with $19.5 billion in December.

Business Investment

Among other import categories, demand for capital goods including drilling equipment and telecommunications gear climbed, pointing to gains in business investment. Purchases of foreign-made consumer goods dropped, reflecting a slump in mobile phones and clothing.

Exports decreased 1.2 percent in January to $184.5 billion. Sales of industrial supplies dropped by $2.63 billion, reflecting the retreat in fuel oil and gold.

Other exporters had better results as demand for American- made machines and electronics climbed.

Stability in the global growth outlook may bolster earnings at companies such as Moline, Illinois-based Deere & Co. (DE), the world’s largest agricultural-equipment maker. Deere in February raised its annual profit estimate and said equipment sales will rise about 6 percent, more than its prior prediction.

Export Demand

“Our key markets remain in good shape,” Susan Karlix, manager of investor communications, said during an earnings teleconference on Feb. 13. “Current government programs in Brazil support higher amounts of equipment sales,” and in China, agriculture “subsidies are expected be higher and very supportive of equipment sales.”

After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit climbed to $48 billion from $44.2 billion. The January level was little changed from the fourth-quarter average, indicating trade so far is having little influence on growth estimates.

A Commerce Department report on Feb. 28 showed GDP grew at a 0.1 percent annual rate from October through December, as the smallest trade gap since the first quarter of 2010 helped to cushion the biggest plunge in defense outlays since 1972. The narrowing of the import-export shortfall, to $387.9 billion, contributed 0.24 percent point to growth, it said.

Country Breakdown

Among countries, the trade gap with South Korea rose to the highest level since November 2004 and the deficit with Canada was the biggest in more than four years.

The trade shortfall with China widened to $27.8 billion in January compared with $26 billion in the same month a year earlier. The country data isn’t adjusted for seasonal variations.

China, the world’s second-biggest economy, plans to raise its budget deficit by 50 percent this year as the government cuts taxes and boosts measures to support consumer demand. It plans to ensure funding for areas like agriculture, education, health care, social security, employment, and government- subsidized housing.

In the euro area, officials this week indicated budget policies may be eased after a backlash against austerity plans.

Economic strains may “justify in a certain number of cases reviewing deadlines for the correction of excessive deficits,” European Union Economic and Monetary Commissioner Olli Rehn told reporters in Brussels on March 4.

A weaker U.S. currency will keep making American goods attractive to overseas buyers. Through the end of February, the dollar dropped 2.4 percent from last year’s peak on June 1 against a trade-weighted basket of currencies from its biggest trading partners, according to Federal Reserve data.

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

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

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