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Trade Gap in U.S. Probably Narrowed as Fuel Costs Declined

Trade Deficit in U.S. Jumps on Pre-Holiday Surge in Imports
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. Photographer: Chip Chipman/Bloomberg

Jan. 11 (Bloomberg) -- The trade deficit in the U.S. probably shrank in November as lower fuel costs curbed imports and exports rebounded, economists said before a report today.

The gap narrowed to $41.3 billion from October’s $42.2 billion, according to the median forecast of 68 economists surveyed by Bloomberg. Another report today may show import prices were little changed in December.

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. In addition, stabilization in global growth, led by a pickup in China, will probably spur sales overseas for American companies such as Alcoa Inc.

“There might be a little bit more of a bounce in exports relative to imports,” said Guy Berger, an economist at RBS Securities Inc. in Stamford, Connecticut. “It seems like oil imports backed off a little bit.”

The Commerce Department’s trade report is due at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from shortfalls of $39.8 billion to $45 billion.

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.

Exports Rebound

American manufacturers are selling more overseas as a result. 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.

Alcoa is among manufacturers anticipating a pickup in global demand, led by China.

The largest U.S. aluminum producer projects the metal’s price will increase 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 conference 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.

Storm’s Impact

“Both imports and exports have weakened sharply in the last couple months,” said Jim O’Sullivan, chief U.S. economist for High Frequency Economics Ltd. in Valhalla, New York. “I suspect some of that weakness was the hurricane.”

Nonetheless, lower fuel prices probably held back any rebound in the value of imports. The cost of imported petroleum dropped 3.6 percent in November, according to figures from the Labor Department. The cost of all goods bought overseas fell 0.9 percent in the month.

A report from the Labor Department, also released at 8:30 a.m., will show the import-price index rose 0.1 percent in December after a 0.9 percent plunge month earlier, according to the Bloomberg survey median.

Oil prices started to climb in early December. The cost of a barrel of Brent crude for delivery on the London-based ICE Futures Europe exchange rose to a high this month of $112.47, up 5 percent from Dec. 7.

                   Bloomberg Survey
=====================================================
                             Trade   Import   Import
                           Balance   Prices   Prices
                            $ Blns     MOM%     YOY%
=====================================================
Date of Release              01/11    01/11    01/11
Observation Period            Nov.     Dec.     Dec.
----------------------------------------------------
Median                       -41.3     0.1%    -1.5%
Average                      -41.5     0.0%    -1.5%
High Forecast                -39.8     0.5%    -1.4%
Low Forecast                 -45.0    -0.8%    -2.0%
Number of Participants          68       43        7
Previous                     -42.2    -0.9%    -1.6%
----------------------------------------------------
4CAST                        -41.3     0.0%     ---
Action Economics             -40.5     0.1%     ---
Aletti Gestielle             -41.0     ---      ---
Ameriprise Financial         -42.0     0.2%    -1.4%
Bank of the West             -40.5     0.1%     ---
Bantleon Bank AG              ---      0.1%     ---
Barclays                     -41.7     0.1%     ---
BBVA                         -41.0     0.1%     ---
BMO Capital Markets          -41.0     0.1%     ---
BNP Paribas                  -40.2     0.1%     ---
BofA Merrill Lynch           -41.5    -0.1%     ---
Briefing.com                 -45.0     ---      ---
Capital Economics            -40.0     ---      ---
CIBC World Markets           -41.6     ---      ---
Citi                         -44.5     0.1%     ---
ClearView Economics          -43.0    -0.5%     ---
Commerzbank AG               -41.0     ---      ---
Credit Agricole CIB          -41.0     ---      ---
Credit Suisse                -41.0     0.2%     ---
Daiwa Securities America     -41.0     ---      ---
DekaBank                     -41.2     0.1%     ---
Deutsche Bank Securities     -43.0    -0.1%     ---
Deutsche Postbank AG         -41.5     0.1%    -1.5%
Exane                        -41.8     ---      ---
First Trust Advisors         -40.1     0.3%     ---
FTN Financial                -42.5     ---      ---
Goldman, Sachs & Co.         -41.3     ---      ---
Helaba                       -41.0     ---      ---
High Frequency Economics     -41.0     0.0%     ---
HSBC Markets                 -43.1     ---      ---
Hugh Johnson Advisors        -43.1    -0.8%     ---
IDEAglobal                   -41.0     0.2%     ---
IHS Global Insight           -42.5     0.3%     ---
Informa Global Markets       -41.4    -0.3%     ---
ING Financial Markets        -41.0     0.0%     ---
Intesa Sanpaolo              -41.5     ---      ---
J.P. Morgan Chase            -41.3     0.1%    -1.5%
Janney Montgomery Scott      -39.8     0.1%    -1.5%
Jefferies & Co.              -40.5     0.0%     ---
Landesbank Berlin            -42.5    -0.2%     ---
Landesbank BW                -40.0     0.0%     ---
Lloyds Bank                  -42.0     ---      ---
Market Securities            -41.8     ---      ---
Mizuho Securities            -43.0     0.0%     ---
Moody’s Analytics            -40.2     0.5%     ---
Morgan Stanley & Co.         -40.2     ---      ---
National Bank Financial      -42.0     ---      ---
Natixis                      -41.7     ---      ---
Nomura Securities            -41.3    -0.2%     ---
Nord/LB                      -41.5     0.2%     ---
Oxford Economics             -41.9     ---      ---
Pierpont Securities          -40.2     ---      ---
PineBridge Investments       -40.6     0.2%     ---
PNC Bank                     -43.5     ---      ---
Raiffeisenbank International -42.0    -0.2%     ---
Raymond James                -42.0     ---      ---
RBC Capital Markets          -41.6     ---      ---
RBS Securities               -40.0     ---      ---
Regions Financial            -40.6     ---      ---
Scotiabank                   -40.5     ---      ---
SMBC Nikko Securities        -41.5    -0.1%     ---
Societe Generale             -45.0    -0.4%    -2.0%
Standard Chartered           -40.8     0.1%    -1.4%
Stone & McCarthy             -43.5    -0.1%     ---
TD Securities                -40.1     0.2%     ---
UBS                          -40.0     0.3%     ---
University of Maryland       -41.1    -0.2%     ---
Wells Fargo & Co.            -41.2     0.1%    -1.5%
Wrightson ICAP               -40.0    -0.1%     ---
=====================================================

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 in Washington at cwellisz@bloomberg.net

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