September 29, 2020

As U.S. Trade Deficit Grows, Some Growth Forecasts Drop

The trade deficit rose to $45 billion in May, up 12.1 percent from $40.1 billion in April, the Commerce Department said on Wednesday. It was the largest trade gap since November.

Exports slipped 0.3 percent to $187.1 billion. Sales of American farm products dropped to their lowest point in more than two years. American exports have been hurt by recessions in many European countries.

Imports rose 1.9 percent to $232.1 billion. Imports of autos and other nonpetroleum products rose widely.

The trade deficit is running at an annual rate of $501.2 billion, 6.3 percent lower than last year’s deficit.

Paul Dales, senior United States economist at Capital Economics, said the larger trade deficit for May indicated that economic growth in the second quarter could be even weaker than the sluggish 1.5 percent annual rate that he had forecast.

Economists at Barclays said the higher deficit led them to downgrade their growth forecast for the second quarter to 1 percent, from 1.6 percent.

The American economy expanded at an annual rate of only 1.8 percent in the first three months of the year.

For May, exports to the European Union were up 6.4 percent. But over the last five months, exports to this region have declined 6.3 percent from the same period in 2012. Europe has been hurt by a prolonged debt crisis, which has led to recessions across the Continent.

The United States trade deficit with China jumped 15.6 percent to $27.9 billion in May. That is close to the monthly high set in November. So far this year, the trade deficit with China, the largest with any country, is running 3 percent higher than last year.

Article source:

Jobless Claims Fall Unexpectedly, Hinting at a Pickup

The decline in jobless claims, released on Thursday, may foreshadow a strong report on February employment.

The figures were the latest to indicate the economy’s resilience amid higher taxes, although a separate report showing that the United States trade gap widened in January dimmed the near-term outlook a bit.

“Fundamentally, we are getting on a little better footing right now,” said Omair Sharif, an economist at the Royal Bank of Scotland in Stamford, Conn.

Initial claims for state jobless aid fell 7,000 last week to a seasonally adjusted 340,000, the Labor Department said. It was the second consecutive weekly decline, and it confounded economists’ expectations for an increase to 355,000.

The four-week moving average for new claims, a better measure of labor market trends, fell 7,000 to 348,750, the lowest level since March 2008.

On Jan. 1, a 2 percent payroll tax cut ended and tax rates rose for wealthy Americans. In addition, $85 billion in federal budget cuts took effect on March 1 that could slice as much as 0.6 percentage point from growth this year.

Economists were encouraged by the drop in claims. “It suggests that some jobs are being created, and there is income that is falling into the consumers’ pockets,” said Sam Bullard, a senior economist at Wells Fargo Securities.

In another sign of improving economic conditions, household debt grew at its fastest pace since early 2008 in the fourth quarter of 2012, the Federal Reserve said in a report. Consumers continued to increase their borrowing in January from December, adding $16.2 billion in debt.

Meanwhile, a separate report showed that worker productivity fell at its fastest pace in four years in the fourth quarter, but the decline was likely to be temporary as economic growth is expected to increase after stalling in late 2012.

“First-quarter growth is going to be substantially stronger than where we ended last year,” Mr. Bullard said.

The economy grew at a 0.1 percent annual rate in the fourth quarter. Growth estimates for the first three months of this year range as high as 2.8 percent, mostly reflecting an increase in the pace of business restocking.

The Commerce Department reported that the trade deficit widened to $44.45 billion in January from $38.14 billion in December. Exports fell, giving back the bulk of December’s gains, while imports rebounded after being depressed by disruptions to port activity in the previous months.

The inflation-adjusted trade deficit widened to $48 billion from $44.2 billion in December. Economists said this suggested that trade would be a small drag on first-quarter growth.

“The sharp deterioration in trade shaves a bit from the outlook for growth in the first quarter,” said Diane Swonk, chief economist at Mesirow Financial. “There are signs that domestic demand is firming, which would provide a major offset to weakness abroad.”

While the latest jobless claims data fell outside the period for the government’s report on February employment due on Friday, economists said they would not be surprised if job growth during the month beat expectations.

A Reuters survey of economists said employers probably added 160,000 jobs last month, a small increase from 157,000 in January. That would just be enough to hold the jobless rate steady at 7.9 percent.

Economists say job gains of at least 250,000 a month are needed to significantly reduce unemployment. Job growth averaged 200,000 in the three months through January.

Worker productivity fell at a 1.9 percent annual rate, the weakest pace since the fourth quarter of 2008, the Labor Department reported. A month ago it estimated that productivity, hourly output per worker, fell at a 2 percent pace.

It increased at a 3.1 percent rate in the third quarter. Economists polled by Reuters had expected the decline in productivity to be revised to a 1.6 percent rate.

The drop largely reflects a surge in hiring while output continued to expand at a slower pace. The economy added about 600,000 jobs in the fourth quarter, but gross domestic product grew at only a 0.1 percent rate.

Article source:

Decline in Exports Hurts U.S. Trade Deficit

WASHINGTON — The trade deficit in the United States widened in October, the government said Tuesday, as exports suffered the biggest drop in nearly four years, indicating slowing global demand.

The Commerce Department said the trade gap increased 4.9 percent to $42.2 billion. In a sign of weak domestic demand, imports dropped to the lowest level in one and a half years. Economists had expected the trade deficit to rise to $42.6 billion in October.

The wider trade gap in October reflected a 3.6 percent fall in exports of goods and services to $180.5 billion. That was the biggest percent drop in exports since January 2009.

“The report tells a tale of weakening economic growth momentum both domestically and globally,” said Millan Mulraine, a senior economist at TD Securities in New York.

Exports have been one of the pillars supporting the economy since the 2007-09 recession ended. The pull back was telegraphed by weak manufacturing surveys and reflects slowing global demand.

Imports of goods and services fell 2.1 percent to $222.8 billion in October, the lowest since April 2011.

Trade was a modest boost to the third quarter’s 2.7 percent annual growth in gross domestic product. Revisions to September’s data showed a narrower trade gap than previously reported and suggested the contribution from trade was probably slightly bigger.

Though October’s trade data implied trade would make another small contribution to G.D.P. in the fourth quarter, economists said the size of the drop in exports raised the bar high for that. In addition, a strike by West Coast dock workers in November likely reduced imports and exports during the month.

The three-month moving average of the trade deficit, which irons out month-to-to month volatility, widened modestly to $41.7 billion from $41.5 billion in the three months to September.

“If the trade flows over the last three months are to be taken as legitimate economic indicators, they point to contracting global trade flows,” said John Ryding, chief economist at RDQ Economics in New York. “If global trade is contracting, this is a negative growth signal. “

In a sign of weak domestic demand, wholesale inventories increased 0.6 percent in October as sales fell for the first time in three months, the Commerce Department said in a second report.

The inventories-to-sales ratio, a measure how long it would take wholesalers to clear their warehouses, rose to the highest in three years.

While exports from the United States to the 27-nation European Union rose 1.4 percent in October to $21.7 billion, there was a decline in goods shipped to France, Germany, Italy and Britain.

However, the Commerce Department only reports goods trade balances with individual countries and regions on a basis that is not adjusted for seasonal variations.

The E.U. collectively was the United States’ second largest export market last year, and exports in the first 10 months of 2012 were down 0.7 percent compared to same period in 2011.

Although exports to China, which have been growing more slowly than in recent years, surged 23.1 percent in October, imports rose to a record. That pushed the contentious American trade deficit with China to a record $29.5 billion.

China has been one of the fastest growing markets for American goods, and exports to that country were up 6.4 percent for the first 10 months of 2012.

Article source:

U.S. Trade Deficit Narrows as Exports Climb

Other data released on Thursday showed a drop in new claims for unemployment benefits last week, although a storm that battered the East Coast distorted the figures.

The trade deficit shrank 5.1 percent to $41.55 billion, the smallest shortfall since December 2010, the Commerce Department said. Economists had expected it to widen to $45 billion.

Exports jumped 3.1 percent, the biggest increase in over a year. The gain more than offset a 1.5 percent increase in imports that was centered on purchases of consumer goods.

The report provides the latest positive sign for the American economy, which has appeared to pick up as consumers spend more freely and home construction quickens.

“This was a very encouraging report as the improvement in both export and nonpetroleum import activity suggest improving demand both domestically and globally,” said Millan Mulraine, an economist at TD Securities.

Chinese demand for American products appeared to help exporters in September. China bought $8.8 billion in American goods and services, up 0.3 percent from a month earlier, although those figures were not seasonally adjusted.

Exports to the European Union, where a debt crisis has pushed several countries into recession, were flat. The government does not seasonally adjust figures for countries and regions as it does for overall imports and exports.

The larger-than-anticipated decline in the trade gap suggests that American economic growth may have been higher in the third quarter than the 2.0 percent annual rate initially reported.

Like the gain in exports, the rise in imports provided a positive signal for domestic demand, even though imports subtract from economic growth. Imports of consumer goods rose by $2.7 billion.

Analysts said a good deal of the increase reflected imports of Apple’s iPhone 5. That suggested the increase might be temporary.

A separate report showed the number of Americans filing new claims for unemployment benefits fell last week, although Hurricane Sandy made the data difficult to interpret.

Initial claims for state jobless benefits dropped 8,000 to a seasonally adjusted 355,000, the Labor Department said. That was below the median forecast of 370,000 in a Reuters poll of economists.

An analyst from the Labor Department said that the storm, which slammed into the Eastern seaboard on Oct. 29, increased unemployment claims in some states by leaving people out of work, but that it also reduced claims in at least one state because power failures kept it from collecting claim reports.

The four-week moving average for jobless claims, which smooths out volatility, rose 3,250 to 370,500. Economists think readings below 400,000 generally point to rising employment.

Article source:

U.S. Trade Deficit Narrows as Both Imports and Exports Fall

The United States trade deficit shrank in February as imports fell more than exports, according to a government report on Tuesday that suggested a slowdown in global demand.

The monthly trade gap totaled $45.8 billion, down from an upwardly revised estimate of $47 billion in January. Analysts surveyed before the report had expected the deficit to narrow to $44.5 billion, from the previously reported January tally of $46.3 billion.

Exports, after rising in each of the previous five months, fell 1.4 percent in February to $165.1 billion. That was led by a $1 billion drop in auto and auto parts exports, with smaller declines for other major categories. Services exports rose just enough to set a record.

Imports, which like exports have roared back from the depths of the global financial crisis in 2008 and 2009, fell a larger 1.7 percent in February to $210.9 billion.

Automotive imports fell $2.3 billion, followed by a $2.1 billion drop in capital goods. Imports of consumer goods rose $2.3 billion in February.

The average price for imported oil rose for the fifth straight month in February to $87.17 per barrel, the highest since October 2008. But that was tempered by the lowest quantity of crude oil imports since February 1999.

The closely watched trade deficit with China shrank 19 percent in February to $18.8 billion, as imports from that country fell and exports to the Asian manufacturing giant rose.

While Beijing could point to the smaller trade gap as a sign its economy was becoming less reliant on exports, America’s trade deficit with China was still 21 percent higher for the first two months of the year.

China’s trade figures released earlier this week showed that in the first quarter of 2011 it ran an overall trade deficit for the first time since 2004.

Though imports to the United States declined in February, a second report by the Labor Department showed the import prices rose more than expected in March to post their largest increase in more than a year and a half, driven by a surge in imported petroleum costs and higher food prices.

Overall import prices rose 2.7 percent last month, a sixth consecutive month of gains, the Labor Department said. The increase outstripped economists’ forecasts for a 2.2 percent increase and followed a 1.4 percent rise in February.

Excluding volatile petroleum and food prices, import prices were up only a fractional 0.3 percent after rising 0.6 percent the prior month. In the 12 months to March, overall import prices surged 9.7 percent, the largest increase since April.

The monthly rise in import prices reflected a 10.5 percent surge in petroleum, the biggest increase since June 2009, which followed a rise of 4 percent in February. Imported food prices increased 4.2 percent, the largest advance since July 1994, after rising 0.7 percent in February.

Article source: