Trade Deficit in U.S. Widened From Three-Year Low

June 4 (Bloomberg) -- Bloomberg Economics Editor Michael Mckee reports that the U.S. trade deficit widened in April by 8.5 percent to $40.3 billion, from a more than three year low in March. He speaks on Bloomberg Television's "In The Loop."

(Corrects May oil prices in 10th paragraph.)

The trade deficit in the U.S. widened in April from a more than three year low, reflecting a rebound in imports of consumer goods and business equipment that eases concern about the degree of slowing in economic growth.

The gap grew by 8.5 percent to $40.3 billion from a $37.1 billion in March shortfall that was smaller than previously estimated, Commerce Department figures showed today in Washington. The median forecast in a Bloomberg survey of 68 economists called for the deficit to grow to $41.1 billion. Imports climbed by 2.4 percent, twice the gain in exports.

American demand for foreign-made mobile phones, automobiles and computers accelerated, pointing to gains in household and business spending that will help the world’s largest economy weather government cutbacks. Record U.S. exports of autos and parts and consumer goods also indicate global growth is stabilizing.

“The details of this report offer an encouraging take on both U.S. and global economic activity at the start of the Quarter,” Millan Mulraine, an economist at TD Securities USA LLC in New York, said in a note to clients.

Stock-index futures held earlier gains after the report. The contract on the Standard & Poor’s 500 Index maturing this month rose 0.1 percent to 1,638.5 at 8:57 a.m. in New York.

Photographer: Tim Rue/Bloomberg

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Photographer: Tim Rue/Bloomberg

A tugboat helps guide a Mediterranean Shipping Co. (MSC) ship loaded with freight containers in this aerial photograph approaching the Port of Long Beach in Long Beach, California.

Bloomberg survey estimates ranged from trade deficits of $36.7 billion to $43.5 billion. The March shortfall, which was revised from an initially reported $38.8 billion, was the smallest since October 2009. The Commerce Department today issued its annual revisions, affecting data back to 1999.

More Imports

Imports grew to $227.7 billion from $222.3 billion in March. Purchases of foreign-made autos and parts climbed by $1.28 billion, while demand for mobile phones rose by $816 million. In addition, American purchases of computers shot up by $429 million and by $330 million for telecommunications gear.

The import total would have been even larger excluding a pullback in oil demand. U.S. petroleum purchases from abroad of $29.6 billion were the lowest since November 2010.

Excluding petroleum, the trade shortfall grew to $20.6 billion in April from $16.7 billion.

Stabilizing crude prices means oil probably had little effect on the value of imports last month. Brent crude traded on the ICE Futures Europe exchange in London at an average $103.4 in April, down from $109.5 a barrel the prior month. They averaged $103.3 a barrel in May.

Exports Grow

Exports increased 1.2 percent to $187.4 billion, the second-highest on record, boosted by a $586 million gain in sales of autos and parts and a $1.96 billion advance in consumer goods, including jewelry and diamonds.

After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit widened to $47.6 billion from $44.6 billion in March. The April reading was little changed from the $47.8 billion first-quarter average, indicating trade so far is having little influence on growth this quarter.

The trade gap with China, the world’s second-biggest economy, jumped 34.8 percent to $24.1 billion from $17.9 billion, today’s report showed. The figures are not adjusted for seasonal variations and can become volatile around holidays.

Honeywell International Inc. (HON), a Morris Township, New Jersey-based maker of cockpit controls and thermostats, is among companies seeing a slowdown in China this quarter.

Global Outlook

“In the short term, there’s no doubt demand has decreased” in China, Chief Executive Officer David Cote said during a conference presentation on May 29. “There are going to be some ups and downs but I do believe they’re working their way through that.”

The U.S. economy expanded at a 2.4 percent annualized rate in the first three months of 2013. The trade gap widened to $391.5 billion, subtracting 0.21 percentage point from growth as imports climbed more than exports.

Economic growth may cool this quarter to a 1.6 percent annualized rate, before accelerating in the last six months of the year, according to the median forecast of economists in a separate Bloomberg survey conducted in May.

A stronger U.S. currency will make American exports less attractive to overseas buyers. The Dollar Index, used by IntercontinentalExchange Inc. to track the greenback against currencies of six U.S. trading partners, has climbed 4.5 percent from Feb. 1, this year’s low, through yesterday.

Sales Abroad

Even so, U.S. companies are benefiting from overseas demand in some parts of the world. Caterpillar Inc. (CAT), the largest maker of construction and mining equipment, on May 20 said global retail sales fell at a slower pace in the three months through April from a year ago, as Latin America improved. Wet, cold weather hurt North American machine retail sales, the Peoria, Illinois-based company said.

The Organization for Economic Cooperation and Development in May forecast that global economic growth will accelerate in 2014, with both the U.S. and Japan continuing to outpace the euro area. The euro-area economy will shrink in 2013 before expanding next year, it said. China, which isn’t a member of the OECD, will expand 8.4 percent in 2014 after growing 7.8 percent this year, according to the report.

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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