Trade Gap in U.S. Probably Widened as Expansion Drew in Imports

Trade Gap in U.S. Probably Widened as Expansion Drew in Imports

Nov. 13 (Bloomberg) -- The trade deficit in the U.S. probably widened in September, reflecting rising demand for imported oil and automobiles as the economy rebounded from the worst recession since the 1930s, economists said before a report today.

The gap increased to $31.8 billion from $30.7 billion the prior month, according to the median of 77 estimates in a Bloomberg News survey. Other figures today may show the cost of goods from abroad rose in October for a third straight month.

Demand for foreign products may keep growing in coming months as consumer and business spending improve and companies aim to prevent inventories from becoming too lean. Exports may also rise as expanding economies in Asia and Europe along with a weak dollar drive demand for American goods, giving manufacturers such as Dow Chemical Co. a lift.

“Domestic demand is clearly picking up and that is going to be pulling in imports,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. “The trend over the next few months will be for imports to pick up faster than exports.”

The Commerce Department’s trade figures are due at 8:30 a.m. in Washington. Economists’ deficit estimates ranged from $28.6 billion to $34.1 billion.

A report from the Labor Department at the same time may show import prices rose 1 percent in October as crude oil climbed, according to the survey median. The cost of foreign goods probably fell 5.5 percent from a year earlier, the survey showed.

Global Expansion

A collapse in world trade earlier this year brought the gap down to $26.4 billion in May, its lowest level since November 1999, as imports plunged even faster than exports. As commerce begins to pick back up, global leaders agree more needs to be done to strengthen the expansion.

U.S. Treasury Secretary Timothy Geithner and other finance ministers at the Asia-Pacific Economic Cooperation forum in Singapore this week reiterated a pledge to maintain stimulus efforts “until a durable recovery in private demand is secured.”

Asia is “leading the world” back to recovery, Geithner told reporters at a joint press briefing with his APEC counterparts. The leaders are working toward a rebalancing that will make global growth more reliant on spending by Asian consumers and businesses and less dependent on their American counterparts.

China’s economy grew 8.9 percent in the third quarter from the same period in 2008, the best performance in a year.

Growth in Asia

“The economic outlook for the rest of 2009 appears to be stabilizing, with strong growth in Asia Pacific, especially China, and other emerging geographies,” Andrew Liveris, Dow Chemical’s chief executive officer, said in an Oct. 22 statement.

Dow’s factories around the world ran at 78 percent of capacity in the third quarter, an increase of 3 percentage points, because of increased demand in developing markets, including China and Brazil, as well as relatively low North American ingredient costs that led to increased exports. The largest U.S. chemical maker yesterday said cost cuts and rising sales will boost earnings more than analysts estimate.

The U.S. is also growing again after posting its worst contraction in seven decades. The world’s largest economy expanded at a 3.5 percent annual rate in the third quarter, the best performance in two years. Economists surveyed this month forecast a 3 percent rate of growth this quarter.

Stocks have surged since March on signs the recession was easing. The Standard and Poor’s 500 Index has gained 61 percent since reaching a 13-year low March 9.

An improving economy and rebounding equities may support consumer confidence even as the job market continues to deteriorate. The Reuters/University of Michigan preliminary sentiment index for this month, due today at 10 a.m., may rise to 71 from 70.6 in October, according to the median estimate of economists surveyed.

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