BL: U.S. Trade Deficit Probably Widened in April on Fuel Imports
By Shobhana Chandra
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June 10 (Bloomberg) -- The U.S. trade deficit probably widened in April as the surging cost of oil boosted imports, economists said ahead of a government report today.
The gap between imports and exports expanded to $60 billion, from $58.2 billion in March, according to the median forecast in a Bloomberg News survey of 70 economists.
Rising fuel prices will keep pushing imports higher, while a weaker dollar stimulates export demand by making American-made goods more competitive. Sales abroad are one of the few bright spots in the economy as the two-year housing slump and slowdown in consumer spending cause growth to almost stall.
``The oil deficit is likely to widen sharply,'' said Brian Bethune, director of financial economics at Global Insight Inc. in Lexington, Massachusetts. ``Robust export growth remains a crucial support to the U.S. economy.''
The Commerce Department will issue the report at 8:30 a.m. in Washington. Economists' estimates of the deficit ranged from $56 billion to $63 billion.
Growing economies in Asia are stoking demand for goods such as aircraft. Boeing Co., the world's second-largest commercial planemaker, estimates its growth of as much as 5 percent a year will come mainly from outside the U.S., officials said on May 30. Exports, which fell in March for the first time in more than a year, may help avert a bigger slowdown in manufacturing as American consumers buy fewer expensive items like cars.
``Currently, the demand for U.S. exports arising from strong global growth has been an important offset to the factors restraining domestic demand, including housing and tight credit,'' Federal Reserve Chairman Ben S. Bernanke said in a speech last week.
Dollar Drop
U.S. exporters are also getting a boost from the dollar, which was down 9.6 percent against a trade-weighted basket of currencies from major trading partners in the 12 months ended in April.
At the same time, the weaker currency has contributed to an ``unwelcome rise in import prices and consumer-price inflation,'' Bernanke said in his speech, and policy makers are ``attentive'' to the implications of changes in the dollar.
Prices of imported goods rose more than forecast in April and costs excluding oil also increased, according to figures from the Labor Department.
Trade's influence on growth is based on inflation-adjusted figures, lessening the impact of the jump in oil costs. The trade gap in April dropped to the lowest level since November 2003 after taking price changes into account.
Trade's Contribution
A narrowing of the trade deficit contributed 0.8 percentage point to growth in the first three months of the year. The gap last quarter was the smallest since 2002.
Illinois Tool Works Inc., the maker of Hobart mixers and Wilsonart countertops, forecasts its businesses outside North America will generate 60 percent of revenue in four or five years from about half now.
``The faster-growing end markets clearly are not in North America, but in Asia, Latin America and Eastern Europe,'' Chief Executive Officer David Speer said in a May 28 presentation.
The deficit with China, which makes up the largest share of the U.S. trade gap, is a political sticking point. Some U.S. lawmakers accuse China of keeping its currency undervalued to boost exports.
Treasury Secretary Henry Paulson, who has favored diplomacy in place of punitive legislation to urge quicker appreciation of the yuan, last month refrained from calling China a currency manipulator.
China's exchange rate practices ``justifiably remain a focal point for the international community,'' Treasury officials said in a report.
Bloomberg Survey
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Trade
Balance
$ Blns
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Date of Release 06/10
Observation Period April
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Median -60.0
Average -59.9
High Forecast -56.0
Low Forecast -63.0
Number of Participants 70
Previous -58.2
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4CAST Ltd. -60.7
Action Economics -62.0
AIG Investments -62.0
Aletti Gestielle SGR -59.7
Argus Research Corp. -61.0
Banc of America Securitie -62.0
Bank of Tokyo- Mitsubishi -57.9
Barclays Capital -62.0
BMO Capital Markets -59.3
BNP Paribas -62.0
Calyon -59.1
CIBC World Markets -59.0
Citi -59.0
Commerzbank AG -60.5
Credit Suisse -59.0
Daiwa Securities America -60.0
DekaBank -59.9
Desjardins Group -61.0
Deutsche Bank Securities -60.5
Deutsche Postbank AG -59.2
Dresdner Kleinwort -59.0
DZ Bank -59.5
First Trust Advisors -56.3
Fortis -61.1
FTN Financial -59.0
Global Insight Inc. -58.2
Goldman, Sachs & Co. -59.5
H&R Block Financial Advis -57.5
Helaba -60.0
High Frequency Economics -63.0
Horizon Investments -61.0
HSBC Markets -60.0
IDEAglobal -61.0
Informa Global Markets -60.5
ING Financial Markets -58.0
Insight Economics -61.0
Intesa-SanPaulo -60.0
J.P. Morgan Chase -60.0
Janney Montgomery Scott L -60.5
JPMorgan Private Client -58.0
Landesbank Berlin -56.0
Landesbank BW -59.2
Lehman Brothers -57.9
Lloyds TSB -60.0
Maria Fiorini Ramirez Inc -61.0
Merk Investments -57.1
Merrill Lynch -60.5
MFC Global Investment Man -60.0
Moody's Economy.com -59.5
Morgan Stanley & Co. -61.2
National City Corporation -59.9
Natixis -60.7
Nomura Securities Intl. -59.5
Nord/LB -59.0
PNC Bank -59.0
RBS Greenwich Capital -61.0
Ried, Thunberg & Co. -61.0
Schneider Trading Associa -58.6
Scotia Capital -61.0
Societe Generale -59.5
Thomson Financial/IFR -59.3
Tullett Prebon -61.0
UBS Securities LLC -61.0
Unicredit MIB -62.0
University of Maryland -60.0
Wachovia Corp. -58.5
Wells Fargo & Co. -62.0
WestLB AG -59.5
Westpac Banking Co. -59.0
Wrightson Associates -61.0
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To contact the reporters on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
Last Updated: June 10, 2008 00:01 EDT
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