Trade Deficit in U.S. Was Probably Little Changed as Exports, Imports Grew
2010-12-10 12:49:32
The U.S. trade deficit was probably little changed in October as gains in exports, reflecting a weaker dollar and growing economies overseas, kept pace with rising imports, analysts said before a report today.
The projected $43.8 billion gap would follow a $44 billion shortfall in September, according to the median estimate of 78 economists surveyed by Bloomberg News. Other reports may show consumer confidence climbed this month and the cost of imported goods rose in November.
3M Co. and General Dynamics Corp. are among companies that will probably benefit from growing demand in markets like China, Brazil and Singapore, which this year are among the top-10 buyers of American-made goods. Accelerating growth in the world’s largest economy may also lift imports, indicating the trade gap will stabilize near current levels.
“We’re looking for exports to be a big plus as our major trading partners are doing well,” said Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado. “We don’t see much improvement in the trade deficit next year” as imports also climb.
The Commerce Department trade figures are due at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from deficits of $39.5 billion to $46.5 billion.
Import Prices
Also at 8:30 a.m., a Labor Department report may show the import-price index rose 0.8 percent last month, reflecting higher costs for crude oil and metals, according to the Bloomberg survey median. Estimates ranged from gains of 0.3 percent to 1.6 percent.
The Thomson Reuters/University of Michigan’s preliminary household sentiment index rose to 72.5 this month, the highest level since June, according to the Bloomberg survey median. The gauge averaged 89 in the five years leading up to the recession that began in December 2007. The report is due at 9:55 a.m.
Since reaching a one-year high on June 7, the dollar has fallen 6.6 percent against a trade-weighted basket of currencies. The drop makes American goods cheaper to buyers abroad and will keep spurring manufacturing, which expanded for a 16th consecutive month in November.
Growth overseas is contributing to demand for U.S. goods. China, set to become the world’s second-largest economy this year, had a 9.6 percent gain in third-quarter gross domestic product from a year ago. Singapore, in the running to be the world’s fastest-growing economy this year, expanded 10.6 percent while Brazil, South America’s biggest economy, grew 6.7 percent.
International Orders
General Dynamics, based in Falls Church, Virginia, is seeing “strong international order activity and interest, particularly in the emerging markets,” Chief Executive Officer Jay Johnson said in a Dec. 2 industry conference presentation.
St. Paul, Minnesota-based 3M, the maker of Scotch tape and films to brighten television screens, is expanding in emerging markets, which make up one-third of its sales and may climb to as much as 45 percent by 2015, according to company estimates.
“These opportunities continue to grow,” George W. Buckley, chief executive officer, said in a Dec. 7 conference call. Overseas sales will benefit from “India and Latin America, gathering momentum in sort of China-like style.”
President Barack Obama is seeking to double American exports over the next five years. The Commerce Department has asked industry groups to review its proposal to relax export controls for technology items with military uses, covering sales to 37 allies including Germany, Japan and Canada.
China’s Surplus
China’s trade surplus with the U.S. remains a source of tension as some members of Congress accuse the Asian nation of keeping its currency too low in order to boost sales overseas. The renminbi’s advance against the dollar of 0.1 percent last month and 0.3 percent in October fell short of the 1.7 percent climb in September that Treasury Secretary Timothy F. Geithner signaled was appropriate.
China today reported a monthly trade surplus of $22.9 trillion for November, exceeding the median forecast in a Bloomberg News survey. The excess of exports to America over imports was about $16.7 billion, equivalent to about three quarters of the total.
Improving U.S. demand and the need to restock inventories led to gains in imports that swamped the rise in exports over the past two quarters. A widening deficit subtracted 1.76 percentage points from U.S. GDP in the third quarter as the economy expanded at a 2.5 percent annual rate.
Imports will probably grow at a slower pace as inventories are now better aligned with sales, indicating the deficit will stabilize and trade will no longer be an obstacle to GDP.
Bloomberg Survey
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Trade Import U of Mich Federal
Balance Prices Conf. Budget
$ Blns MOM% Index $ Blns
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Date of Release 12/10 12/10 12/10 12/10
Observation Period Oct. Nov. Dec. P Nov.
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Median -43.8 0.8% 72.5 -138.0
Average -43.7 0.8% 72.6 -135.0
High Forecast -39.5 1.6% 76.5 -110.0
Low Forecast -46.5 0.3% 69.0 -145.0
Number of Participants 78 53 67 25
Previous -44.0 0.9% 71.6 -120.3
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4CAST Ltd. -45.0 0.5% 73.5 ---
ABN Amro Inc. -43.0 --- 73.0 ---
Action Economics -45.0 0.7% 71.0 -142.0
Aletti Gestielle SGR -45.4 --- 71.5 ---
Ameriprise Financial -42.5 0.7% 73.0 ---
Banesto -43.9 0.8% 70.7 ---
Bank of Tokyo- Mitsubishi -43.4 0.7% 69.0 -142.0
Barclays Capital -44.0 0.7% 72.0 -142.0
BBVA -42.8 0.7% 72.0 -115.0
BMO Capital Markets -43.0 --- --- ---
BNP Paribas --- 0.8% 75.0 -130.0
BofA Merrill Lynch Research -45.0 --- 71.0 -145.0
Briefing.com -43.0 --- 72.5 -142.0
Capital Economics -40.0 --- 75.0 ---
CIBC World Markets -45.5 --- --- ---
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ClearView Economics -45.5 0.8% 70.5 ---
Commerzbank AG -44.0 --- 75.0 ---
Credit Agricole CIB -45.0 --- 72.1 ---
Credit Suisse -42.0 1.0% 74.0 ---
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Hugh Johnson Advisors -43.0 0.6% 70.0 ---
Ibersecurities -43.8 --- --- ---
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Janney Montgomery Scott -45.5 0.7% --- ---
Jefferies & Co. -46.5 0.8% 73.0 -140.0
Landesbank Berlin -39.5 1.0% 73.5 ---
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Maria Fiorini Ramirez --- --- --- -142.0
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Moody’s Analytics -41.3 0.8% 74.0 ---
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Morgan Stanley & Co. -43.5 --- --- -137.0
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PineBridge Investments -42.0 1.2% 74.0 ---
PNC Bank -45.0 --- --- ---
Raiffeisen Zentralbank -44.0 0.8% --- ---
Raymond James -45.3 --- 72.2 ---
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RBS Securities Inc. -43.7 --- 73.5 ---
Scotia Capital -43.6 --- --- ---
Societe Generale -45.7 1.6% 76.5 ---
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Union Investment -44.0 --- 72.6 ---
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