Trade Gap Probably Widened in August on Higher Crude Oil Prices

Trade Gap Probably Widened in August on Higher Crude Oil Prices
A crane stacks empty containers in the TraPac Inc. terminal at the Port of Oakland in Oakland. Photographer: Ken James/Bloomberg

The U.S. trade deficit probably climbed in August on higher crude oil costs at the same time slower global growth reduced demand for American exports, economists said before a report today.

The gap widened to $44 billion during the month from $42 billion in July, according to the median forecast of 73 economists in a Bloomberg survey. More expensive oil pushed up import prices in September, and claims for jobless benefits rose, figures from the Labor Department may also show.

A stagnant Europe and slower growth in China and other emerging markets may be starting to curtail demand for U.S. products, a source of strength for the expansion in the second quarter. At the same time, the pickup in the price of fuel may push up the nation’s import bill and costs for American companies.

“Exports grew weakly because of the spreading economic weakness in Europe and Japan and slowing growth elsewhere in the world,” said Steven Wood, chief economist at Insight Economics LLC in Danville, California. “Imports increased despite the recent slowing in domestic demand because of higher energy prices and volumes.”

The Commerce Department’s trade report is due at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from gaps of $47.5 billion to $41 billion.

Price increases for fuel from overseas probably pushed up the value of imports. The active contract on Brent oil on the London-based ICE Futures Europe exchange climbed to $114.57 at the end of August, from $104.92 on July 31.

The pickup in oil costs extended into September, a Labor Department report at 8:30 a.m. is projected to show. The import price index climbed 0.7 percent for a second straight month, according to the median estimate in a Bloomberg survey.

Import Prices

Excluding oil, the cost of goods and materials the U.S. purchases from abroad may be restrained as cooling overseas markets limit demand for commodities like metals. Even the higher energy prices may be difficult for U.S. companies to pass on to consumers as weak job growth puts pressure on sales.

The import-price index is the first of three monthly price reports from the Labor Department. The producer price gauge is due tomorrow, and the consumer-price index, the broadest of the measures, will be released on Oct. 16. The figures are projected to be consistent with Federal Reserve policy makers’ view that inflation will remain subdued.

Another Labor Department report today may show first-time claims for jobless benefits climbed to 370,000 last week from 367,000, economists predicted. The increase highlights uneven improvement in the labor market. Last week, the agency said the jobless rate fell to 7.8 percent, the lowest since January 2009, while employers added 114,000 jobs.

The slackening world economy is weighing on sales at companies such as Caterpillar Inc., which cut its forecast for 2015 earnings after commodity producers reduced capital spending. The world’s biggest construction and mining equipment maker said profit will be $12 to $18 a share, compared with previous projections of $15 to $20.

Peoria, Illinois-based Caterpillar is forecasting moderate and “anemic” growth through 2015, Chairman and Chief Executive Officer Doug Oberhelman said Sept. 24 in a presentation to analysts at a conference in Las Vegas. Construction in emerging markets will probably show modest improvements, he said.

“We’ve seen a slowing in economic growth that was more than we expected,” he said. “We think ’13 could look like 2012 in terms of worldwide economic growth.”

The International Monetary Fund on Oct. 9 cut forecasts for global growth to 3.3 percent this year, the slowest since the 2009 recession, and said there are “alarmingly high” risks of a steeper slowdown. The Washington-based lender projects the 17-country euro area economy will contract 0.4 percent in 2012, worse than its prior forecast, while the U.S. will expand 2.2 percent, faster than an earlier prediction.

“The U.S. itself is doing OK, not great, but we’re not looking at a recession,” said Michael Gapen, a senior economist at Barclays Plc in New York. “Europe is in a minor recession and China is slowing. Exports are a challenge.”

                     Bloomberg Survey
                             Trade  Initial
                           Balance   Claims
                            $ Blns   ,000’s
Date of Release              10/11    10/11
Observation Period            Aug.    6-Oct
Median                       -44.0      370
Average                      -44.0      368
High Forecast                -41.0      377
Low Forecast                 -47.5      355
Number of Participants          73       49
Previous                     -42.0      367
4CAST Ltd.                   -43.2      365
ABN Amro Inc.                -42.1      365
Action Economics             -43.0      377
Aletti Gestielle             -45.0     ---
Ameriprise Financial Inc     -43.5      365
Banca Aletti & C spa         -45.5      370
Bank of the West             -44.0     ---
Barclays                     -44.0      365
BBVA                         -43.0      370
BMO Capital Markets          -43.0      365
BNP Paribas                  -45.0      375
BofA Merrill Lynch Resear    -44.5      365                 -44.6      375
Capital Economics            -44.5     ---
CIBC World Markets           -43.5     ---
Citi                         -43.5      370
ClearView Economics          -43.5     ---
Comerica Inc                 -42.0     ---
Commerzbank AG               -45.0      370
Credit Agricole CIB          -45.0     ---
Credit Suisse                -44.0      375
Daiwa Securities America     -41.7     ---
DekaBank                     -44.0     ---
Desjardins Group             -43.2      370
Deutsche Bank Securities     -44.0      365
Deutsche Postbank AG         -44.0     ---
Exane                        -45.0     ---
First Trust Advisors         -43.9      371
FTN Financial                -42.5     ---
Goldman, Sachs & Co.         -41.0     ---
Hammer Partners SA           -44.0     ---
Helaba                       -42.0      370
High Frequency Economics     -45.5      365
HSBC Markets                 -44.3      364
Hugh Johnson Advisors        -43.0      370
IDEAglobal                   -44.0      360
IHS Global Insight           -44.0      370
Informa Global Markets       -42.6      375
ING Financial Markets        -46.0     ---
Insight Economics            -45.0      370
Intesa Sanpaulo              -43.8     ---
J.P. Morgan Chase            -44.0      365
Jefferies & Co.              -45.5      360
John Hancock Financial        ---       362
Landesbank Berlin            -45.0      375
Landesbank BW                -43.5     ---
Lloyds Bank Wbm              -45.0      375
Maria Fiorini Ramirez Inc     ---       375
Market Securities            -43.5     ---
Mizuho Securities            -45.0      370
Moody’s Analytics            -45.7      365
Morgan Stanley & Co.         -45.0      370
National Bank Financial      -44.5     ---
Natixis                      -43.0     ---
Nomura Securities Intl.      -41.2     ---
Nord/LB                      -43.0      365
Oxford Economics Ltd         -43.0      370
Pierpont Securities LLC      -47.5      365
PNC Bank                     -45.0     ---
Raiffeisenbank Internatio    -44.0     ---
Raymond James                -41.9      370
RBC Capital Markets          -45.0      365
RBS Securities Inc.          -43.0      360
Regions Financial Corp       -45.4     ---
Scotiabank                   -43.9     ---
Societe Generale             -45.8      363
Southern Polytechnic Stat     ---       355
Standard Chartered           -44.7      362
Stone & McCarthy Research    -43.0      370
TD Securities                -45.7      360
UBS                          -43.5      370
UniCredit Research           -44.0     ---
University of Maryland       -45.2      375
Wells Fargo & Co.            -43.3     ---
Westpac Banking Co.          -44.5      375
Wrightson ICAP               -44.0      375
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