The U.S. trade deficit probably widened in December for the first time in four months as the cost of imported oil climbed, economists said before a report today. The gap grew to $40.5 billion from the $38.3 billion shortfall in November, according to the median of 77 estimates in a Bloomberg News survey. Other figures may show consumer confidence climbed this month. In addition to higher costs for oil, imports may have also been boosted by the need to rebuild inventories in December as American consumers spent at a faster clip in the fourth quarter. At the same time, manufacturers like Caterpillar Inc. are seeing gains in exports as demand picks up from customers in emerging economies, including China and Brazil. “It’s a pricing story on imports, as energy prices went up quite a bit,” said Harm Bandholz, chief U.S. economist at UniCredit Group in New York. “It’s virtually certain that imports will keep rising in the first half as demand continues to pick up.” The Commerce Department’s trade report is due at 8:30 a.m. New York time. Economists’ forecasts ranged from shortfalls of $37.4 billion to $43.5 billion. With orders to American factories climbing as global demand rebounds, manufacturer shares have strengthened. The Standard & Poor’s Supercomposite Industrial Machinery Index, which includes companies like Caterpillar and Deere & Co., has jumped 64 percent in the past 12 months, almost three times the 24 percent gain in the broader S&P 500. American Consumers American households have contributed more to the recovery in recent months. Consumer spending, which accounts for 70 percent of the U.S. economy, rose at a 4.4 percent annual pace in the fourth quarter, the biggest gain in four years, according to Commerce Department figures. The gain is supplementing improving sales overseas. China, set to become the world’s second-largest economy this year, expanded 9.8 percent in the fourth quarter from a year earlier. India grew 8.9 percent in the third quarter and Brazil, South America’s largest economy, advanced 6.7 percent. Caterpillar, the world’s largest maker of construction equipment, posted fourth-quarter profit that topped analysts’ estimates as sales advanced in China, Australia and Latin America. The Peoria, Illinois-based company said 2011 sales will top $50 billion after coming in at $42.6 billion last year. Global Recovery “Sales are improving in every region, and are at or near records in the developing world,” Mike DeWalt, director of investor relations at Caterpillar, said on a Jan. 27 teleconference. “Over the past quarter, we’ve become somewhat more positive about economic growth in the developed economies of North America, Europe, and Japan.” A product of stronger global growth is higher commodity costs. America’s energy bill may have increased at the end of the year, boosting the value of imports in the Commerce Department’s trade report. The price of imported petroleum climbed 3.9 percent in December from the prior month, and was up 14 percent from a year earlier, according to figures from the Labor Department. Oil prices also partly reflect a weaker dollar, which is down 8.1 percent from last year’s peak in June against a basket of currencies of the U.S.’s leading trading partners. The dollar’s decline also makes American-made goods cheaper for buyers abroad, boosting exports and helping generate more orders to manufacturers. President Barack Obama, who has set a goal of doubling American exports by 2014, said last month in his State of the Union address that the U.S. has made progress. Obama on Exports “Already, our exports are up,” Obama said Jan. 25. “Recently, we signed agreements with India and China that will support more than 250,000 jobs here in the United States. And last month, we finalized a trade agreement with South Korea that will support at least 70,000 American jobs.” At 9:55 a.m., the Thomson Reuters/University of Michigan consumer sentiment index for February may have increased as the economy showed more signs of picking up and stocks climbed. The preliminary February reading rose to 75 from 74.2 in January, according to the Bloomberg survey median.

Source