Bloomberg News - Trade Gap in U.S. Probably Widened in March as Imports Rebounded

By Lorraine Woellert - May 10, 2012 6:00 AM GMT+0200

The trade deficit in the U.S. probably widened in March as imports rebounded from the biggest setback in three years, economists said before a report today.

The gap grew to $50 billion from $46 billion in February, according to the median forecast of 75 economists in a Bloomberg News survey. Another report may show first-time claims forunemployment benefits last week held close to a one-month low.

The pickup in the value of imports probably reflected higher fuel prices and a bounce back in shipments from China following the week-long Lunar New Year celebrations. At the same time, exports may cooled as slower global growth and the European debt crisis limit sales at companies like Caterpillar Inc. (CAT)and United Technologies Corp.

“We’re having headwinds on the global environment, especially from Europe, but seeing support from emerging economies,” said Sean Incremona, a senior economist at 4Cast Inc. in New York. The March widening “looks to be a correction from the very large decline” the prior month, he said.

The Commerce Department’s trade figures are scheduled for release at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from gaps of $45 billion to $54 billion.

Purchases of foreign goods decreased by 2.7 percent in February, the biggest drop since February 2009, according to Commerce Department data last month. Imports from China plunged 18 percent as the Lunar New Year holidays extended into early February. That slump was probably reversed in March, widening the trade gap.

Caterpillar Inc. on April 25 reported a gain in first-quarter revenue that was smaller than analysts estimated after sales fell in China and Brazil. Photo: Jim R. Bounds/Bloomberg

Crude Oil Prices

More-expensive petroleum may also have contributed to the gains. The price of foreign crude oilclimbed 3.5 percent in March, according to figures from the Labor Department. Fuel prices probably retreated last month, helping to restrain inflation from overseas.

The import price index dropped 0.2 percent in April after rising 1.3 percent the prior month, according to the median forecasts of economists surveyed by Bloomberg ahead of Labor Department figures that are also scheduled for 8:30 a.m.

Jobless claims climbed to 368,000 last week from 365,000 a week earlier, economists project another Labor Department report at the same time will show.

A hiring slowdown would raise the risk of weaker consumer spending, which means imports could keep slowing this quarter. Payrolls climbed by 115,000 workers in April, the smallest increase in six months, Labor Department reported last week. The jobless rate fell to a three-year low of 8.1 percent as people left the labor force, adding to worries that the economic expansion is cooling.

After reaching a record in February, U.S. exports may also slow as economies from Europe, to China and Brazil decelerate.

Europe’s Economy

The European debt crisis is curbing demand for goods as governments step up spending cuts. Euro-region unemployment rose to a 15-year high in March and manufacturing contracted in April for the ninth month.

Concerns about Europe have pushed stocks lower this month. The Standard & Poor’s 500 Index has dropped 3.1 percent so far in May.

Caterpillar, the world’s largest maker of construction equipment, on April 25 reported a gain in first-quarter revenue that was smaller than analysts estimated after sales fell in China and Brazil. The Peoria, Illinois-based company said demand in developing nations this year will be lower than anticipated, a reversal after 2011 growth in Latin America and the Asia- Pacific region outpaced North America.