Trade Gap in U.S. Probably Narrowed on Falling Imports as Economy Slowed
The trade deficit probably narrowed in July as a slowing economy prompted Americans to buy fewer goods from abroad, economists said before a government report this week.
The gap between imports and exports decreased to $47 billion from $49.9 billion the prior month, according to the median of 60 estimates in a Bloomberg News survey ahead of the Commerce Department’s Sept. 9 report. The deficit swelled by a record $7.9 billion in June.
Demand for overseas products may cool as American consumers and businesses curb spending in coming months, while growing foreign economies mean companies like Caterpillar Inc. will see sales climb. Exports will probably be a source of strength for manufacturing as the world’s largest economy tries to sustain a recovery from the worst recession since the 1930s.
“Given the underlying sluggishness in domestic demand, there’s no fundamental support for such high import levels,” said Brian Bethune, chief U.S. financial economist at IHS Global Insight in Lexington, Massachusetts. “We expect to see exports bounce higher and imports begin to decline.”
The trade deficit in June widened as imports jumped and shipments abroad declined, the Commerce Department said last month. The overall gap was the widest since October 2008.
Stocks rallied and Treasuries slumped last week after reports on employment and manufacturing alleviated concerns the U.S. was slipping back into a recession. The Standard & Poor’s 500 gained 3.7 percent, the best single-week performance in almost two months.
Job Gains
The Labor Department on Sept. 3 said private payrolls that exclude government agencies climbed 67,000 in August, after a revised 107,000 gain a month earlier that was larger than initially estimated. The unemployment rate rose to 9.6 percent as more people looked for work.
Peoria, Illinois-based Caterpillar, the world’s largest construction equipment maker, said last month it may add as many as 9,000 workers worldwide this year as sales climb in developing markets. About 1,250 of the jobs the company has added so far this year have been in the U.S.
Manufacturing unexpectedly expanded at a faster pace in August as production picked up, a report from the Institute for Supply Management showed last week. At the same time, the group’s services index fell in August to the lowest level in seven months.
‘Uneven Recovery’
“What I see is an uneven recovery,” Bob McDonald, chief executive officer of Procter & Gamble Co., the world’s largest household-products maker, said in a Sept. 3 interview with Bloomberg Television. “What I see when I look at our consumer data is the U.S. economy is improving, the global economy is improving, and what we’d like to do is accelerate the rate of growth.”
Public opinion polls show jobs and the economy are top concerns among voters two months before November congressional elections in which the Democrats are at risk of losing their majorities in the House of Representatives and the Senate.
President Barack Obama’s approval ratings have slipped and support for the Republican Party has grown amid signs the economy was cooling.
Obama said there is “no quick fix” for the economy and promised to lay out new ideas this week to boost growth and hiring. The president, speaking at the White House two days ago, urged Congress to pass a package of measures to help small businesses, including tax breaks and aid to ease credit.
A Labor Department report on Sept. 9 is forecast to show the number of Americans applying for jobless benefits last week fell to 470,000 from 472,000 the previous week, according to the survey median. The level points to a labor market that is struggling to improve.
Inventories at U.S. wholesalers climbed 0.4 percent in July after a 0.1 percent increase the previous month, according to the median estimate of economists surveyed ahead of a Sept. 10 report from the Commerce Department.
Bloomberg Survey
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Release Period Prior Median
Indicator Date Value Forecast
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Cons. Credit $ Blns 9/8 July -1.3 -4.3
Trade Balance $ Blns 9/9 July -49.9 -47.0
Initial Claims ,000’s 9/9 28-Aug 472 470
Cont. Claims ,000’s 9/9 21-Aug 4456 4445
Whlsale Inv. MOM% 9/10 July 0.1% 0.4%
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source: bloomberg.com
