Economy: Trade Gap Narrows on Surge in Exports
12 (Bloomberg) -- The U.S. trade deficit unexpectedly narrowed
in June as the biggest jump in exports in more than four years
overwhelmed record imports of petroleum.
gap shrank 4.1 percent to $56.8 billion from $59.2 billion
in May, the Commerce Department said today in Washington.
Shipments to Germany and the U.K. rose more than 4 percent,
exports to Italy jumped 9.7 percent, and sales to Argentina
and Brazil also climbed.
international demand is helping manufacturers like Caterpillar
Inc. withstand a slowdown in U.S. sales, and today's figures
may lead the government to lift its second-quarter economic
growth estimate. The boost from trade may wane later this
year as expansions in Europe and Japan stall.
balance of trade may continue to show some improvement, but
I think export growth probably hit a peak,'' David Resler,
chief U.S. economist at Nomura Securities International Inc.
in New York, said in an interview with Bloomberg Radio.
had forecast the gap would widen to $62 billion from an initially
reported $59.8 billion in May, according to the median of
estimates in a Bloomberg News survey. Projections of the deficit
ranged from $58 billion to $65.7 billion.
weaker dollar has helped stoke American exports. The currency
has slumped 24 percent versus the euro in the past five years.
It recouped some losses in the past four weeks as the outlook
for Europe's economy dimmed. The dollar was little changed
today at $1.4897 per euro at 11:13 a.m. in New York.
increased 4 percent, the biggest percentage jump since February
2004, to $164.4 billion, led by record overseas sales of food,
industrial supplies, capital goods and consumer goods.
rose 1.8 percent to $221.2 billion after increasing 0.3 percent
in May. The import figures reflected a record $44.5 billion
in purchases of foreign petroleum as well as record purchases
of industrial supplies from overseas and increased demand
for foreign-made autos and parts.
barrel of imported crude oil cost $117.13 in June, up from
$106.28 the previous month.
eliminating the influence of price changes, the trade deficit
narrowed to $39.1 billion, the lowest since December 2001,
from $43.5 billion in May. Those numbers are used to calculate
gross domestic product.
Commerce Department last month estimated the economy expanded
1.9 percent in the second quarter, with the biggest contribution
from trade since 1980 averting a contraction.
in the sweet spot for deficit reduction,'' said Robert Stein,
senior economist at First Trust Advisors in Lisle, Illinois,
who forecast a June gap of $60 billion. He said today's figures
may add as much as 0.9 percentage point to second-quarter
the effect of prices, non-petroleum imports declined during
U.S. trade deficits with Canada, Japan and the European Union
widened. The gap with Mexico shrank as exports to that country
reached a record.
gap with China was $21.4 billion, compared with $21 billion
U.S. lawmakers accuse China of keeping its currency undervalued
to boost exports. Treasury Secretary Henry Paulson, writing
this month on the Web site of Foreign Affairs magazine, said
yuan strengthening still has ``much further to go.'' Of the
advance since a fixed-exchange rate ended in July 2005, Paulson
said 70 percent has come about after he initiated semiannual
economic talks with China in 2006.
deficit with the Organization of Petroleum Exporting Countries
expanded by $200 million to a record $18.1 billion.
manufacturers have received a boost from export orders as
economies overseas grew and the dollar weakened.
the world's largest maker of earthmoving equipment, said July
22 that second-quarter profit climbed 34 percent, helped by
demand in China and the Middle East. Developing markets this
year may grow more than six times as fast as in North America,
where the U.S. may find it hard ``to avoid a recession,''
Chief Executive Officer Jim Owens said in a statement.
Illinois-based Deere & Co., the world's largest maker
of tractors and combines, is scheduled to report third- quarter
results tomorrow and analysts surveyed by Bloomberg News forecast
net income rose to $587 million from $537 million a year earlier.
CEO Robert Lane is counting on orders for tractors in North
America, as well as in Brazil and Russia, to counter declining
revenue from construction and forestry machinery amid the
U.S. housing slump.
economic growth in Japan, Germany and other major trading
partners weakens and the dollar rebounds, the outlook for
exports has softened. The trade-weighted dollar index yesterday
rose to the highest level since February.
continue to see global growth, perhaps not at the same rate,
but it will continue to be solid,'' Commerce Secretary Carlos
Gutierrez said in an interview with Bloomberg Television.
University economist Martin Feldstein, a member of the committee
that charts the American business cycles, said yesterday the
U.S. dollar is cushioning the slowing in the economy and the
currency has further to fall.
pressures over time are going to put downward pressure on
the dollar,'' Feldstein, who retired in June as president
of the National Bureau of Economic Research, said in a Bloomberg
Radio interview. ``A more competitive dollar has been the
driving force in keeping'' gross domestic product expanding.
Institute for Supply Management's index of new export orders
for manufacturers fell last month to the lowest level this