U.S. September Trade Deficit Widens to Record $66.1 Billion
U.S. September Trade Deficit Widens to Record $66.1 Billion
Nov. 10 (Bloomberg) -- The U.S. trade deficit widened more than expected to a record $66.1 billion in September as oil imports surged and exports dropped by the most in four years.
The trade gap in goods and services followed a revised $59.3 billion deficit in August, the Commerce Department said today in Washington. Imports rose 2.4 percent and exports slumped 2.6 percent, the biggest decline since September 2001. The monthly trade deficit with China rose to a record $20.1 billion.
The nation imported a record $23.8 billion worth of petroleum as prices jumped after Hurricanes Katrina and Rita disrupted production on the Gulf Coast. A strike at Boeing Co. contributed to a 72 percent drop in aircraft exports. Oil prices have since receded, the Boeing strike was settled, and foreign economies are accelerating, suggesting exports may rebound and the trade deficit won't widen much more, economists said.
The jump in the deficit ``should be seen as a temporary move rather than a general trend at this point,'' Peter Kretzmer, a senior economist at Banc of America Securities Inc. in New York, said before the report. ``The trend appears to be a gradual improvement in the trade deficit or at least a stabilization.''
Economists expected the deficit to widen to $61.5 billion for the month compared with a previously reported $59 billion gap in August, according to the median of 66 estimates in a Bloomberg News survey. The estimates ranged from $58 billion to $65.5 billion.
Port Disruptions
Disruptions at Gulf Coast ports caused by the hurricanes may have contributed to the jump in the September deficit. The region's ports showed an $11.9 billion deficit in September, compared with an $8.3 billion shortfall in September 2004.
The deficit in goods widened to $71.1 billion from $64.1 billion in August. The government estimated the goods gap would reach about $69 billion in September when it calculated the economy grew at a 3.8 percent annual pace in the second quarter. The bigger goods deficit and an August gap that was bigger than initially reported will subtract from growth when the government next estimates third-quarter output at the end of this month.
Imports rose to a record $171.3 billion in September, reflecting greater demand for civilian aircraft, televisions and clothing as well as oil and natural gas. Oil imports rose as the price jumped to a record $57.32 a barrel, compared with $53.65 in August.
Because the U.S. imports about 50 percent more goods and services than it sells abroad, exports have to grow about twice as fast just to stabilize the trade deficit, economists said. That is a tall order for the fastest growing economy within the Group of Seven industrialized nations.
Growth Drivers
``Our U.S. business is developing very well,'' said Jochen Zeitz, chief executive of Puma AG, Europe's second-largest maker of sporting goods, in a Nov. 4 interview. ``In general, North and South America as well as Asia will be our growth drivers next year.''
Herzogenaurach, Germany-based Puma raised its earnings forecast last week as U.S. sales jumped 63 percent in the third quarter compared with the same time last year on rising demand for Future Cat and Alpine Trail Racer sneakers.
The U.S. trade deficit with China for the first nine months of the year reached a record $146.3 billion, compared with $114.3 billion at the same time last year.
In October, China's trade surplus widened to a record $12 billion as exports of electronics surged, China's customs bureau reported today from Beijing. The surplus compares with $7.56 billion in September and brings China's surplus for the first 10 months of this year to $80.4 billion, from $11.1 billion in the same period a year earlier.
Agreement With China
The U.S. and China agreed this week to limit exports of Chinese clothing through 2008, alleviating one of the most contentious trade issues between the nations before President George W. Bush travels to Beijing at the end of next week.
Bush said yesterday he will tell China's leaders that allowing the market to determine the value of their nation's currency would benefit the world's economy. The president is traveling to Asia as he seeks trade concessions from China to forestall protectionist sentiment in the U.S. Congress.
Exports slumped to $105.2 billion in September from $108 billion the previous month. Exports of capital goods fell by $2.3 billion, more than accounted for by a $2.4 billion drop in civilian aircraft shipments. Exports of industrial supplies, such as chemicals and fuel oil, dropped $1.2 billion. Exports of consumer goods rose.
Boeing Strike
A 28-day machinists strike at Chicago-based Boeing, the world's largest aircraft maker, ended on Sept. 29. After shipping just two planes to foreign buyers that month, Boeing delivered 13 aircraft to overseas clients in October, according to figures on the company's Web site.
``If oil prices can remain relatively stable, we think the world economy will keep growing and the airlines' desire for increased capacity is going to keep growing,'' Lars Andersen, who heads Boeing's 777 program, said in an interview yesterday.
The outlook for all exports is improving as economies abroad gain momentum, economists said. Japan, the world's second-largest economy, grew at the fastest pace in more than a decade in the first six months of the year. The European Commission expects growth in the 12 countries sharing the euro will accelerate in the third and fourth quarters, according to a report last month.
``Global demand looks to be improving and is likely to help the export side'' of the U.S. trade balance, Jonathan Basile, an economist at Credit Suisse First Boston in New York, said before the report.
Dollar's Slide
A three-year slide in the dollar, which reduced its value by 17 percent against a basket of currencies from the nation's biggest trading partners, has helped stimulate exports by making American goods cheaper overseas, Banc of America's Kretzmer said.
While the dollar has regained about a fifth of its decline since reaching a low in March, exports will still benefit from a cheaper dollar, Kretzmer said.
``There are some tentative signs that more U.S. growth will come from exports,'' he said. ``Trade is unlikely to be the drag on the economy it was before.''
By region, the Commerce Department reported that the trade deficit with Japan narrowed to $6.4 billion from $6.6 billion. The deficit with the Organization of Petroleum Exporting Countries jumped to a record $9.1 billion.
Elsewhere, the deficit with Canada, the largest U.S. trading partner, rose to a record $7.4 billion. The gap with Mexico widened to $4.3 billion. The deficit with the European Union narrowed to $10.1 billion from $11.3 billion.
To contact the reporters on this story: Carlos Torres in Washington ctorres2@bloomberg.net or Joe Richter in Washington 1872 or jrichter@bloomberg.net
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