BLBG: Trade Deficit in U.S. Probably Widened as Imports Increased
By Shobhana Chandra
March 11 (Bloomberg) -- The U.S. trade deficit probably widened in January for a third month as imports grew faster than exports, pointing to a rebound in global economic growth, economists said before a report today.
The gap increased to $41 billion from $40.2 billion the prior month, according to the median forecast of 73 economists surveyed by Bloomberg News. Another report may show initial claims for jobless benefits fell for a second week.
Imports may keep growing as the world’s largest economy improves and companies replenish depleted inventories. Emerging countries are leading a worldwide recovery that, together with a weaker dollar, is helping lift sales at companies including Cisco Systems Inc., which may prevent the deficit from deteriorating much more in coming months.
“Global trade is definitely coming back,” said David Semmens, an economist at Standard Chartered Bank in New York. “The U.S. will benefit from rising exports. We can expect overseas economies to improve faster than domestic growth.”
The Commerce Department’s report is due at 8:30 a.m. in Washington. Economists’ estimates ranged from deficits of $37 billion to $44 billion.
Also at 8:30 a.m., Labor Department figures may show initial jobless applications fell by 9,000 to 460,000 in the week ended March 6, according to the median forecast of 45 economists surveyed.
U.S.-made goods have become more attractive for overseas buyers following the decline in the dollar last year. It has fallen about 11 percent against a trade-weighted basket of currencies from the U.S.’s biggest trading partners from a five- year high reached on March 9, 2009.
‘Underlying Strength’
Manufacturers are seeing signs of improvement in global demand. San Jose, California-based Cisco, the biggest maker of networking equipment, said it sees “underlying strength” in the economy and that customers are saying they need to spend more on technology.
“We see very positive spending trends across all of our business segments” and across the world, Ned Hooper, who is in charge of Cisco’s consumer unit and mergers and acquisitions, said on March 3 at a conference in San Francisco.
Higher oil prices probably also helped boost the import bill. A barrel of crude oil on the New York Mercantile Exchange in January averaged $78.40, up from $74.60 in December. Oil closed at $81.94 yesterday.
Fourth Quarter
The economy, emerging from the worst recession since the 1930s, expanded at a 5.9 percent annual pace in the fourth quarter, the most since 2003. Exports accounted for 2.32 percentage points of growth, the biggest contribution in 13 years.
President Barack Obama has said the U.S. needs to focus on expanding exports and investment rather than consumption as in the past. He plans to increase government-backed export financing for small businesses by 50 percent, to $6 billion a year.
Stronger overseas sales were one reason Parker Hannifin Corp., the world’s largest manufacturer of hydraulic equipment, raised its 2010 earnings estimate in January.
“We’re coming off the bottom,” Donald E. Washkewicz, chairman and chief executive officer of the Cleveland-based company, told analysts. “Asia is extremely strong.”
The International Monetary Fund, in a January report, projected emerging-market and developing economies will expand 6 percent as a group this year, compared with 2.1 percent for developed nations.
China, the world’s biggest exporter, this week reported its trade surplus shrank to the lowest level in a year in February as exports surged 46 percent from a year earlier, while imports rose 45 percent. The nation has prevented any rise in the yuan against the dollar since July 2008 to aid exporters.
