U. S. trade gap worsens in March despite record exports

Posted by RJ & Makay on May 13, 2011

canada, china, commerce-department, emerging-markets, european-union, gregory-hayes, gus-faucher, moodys-analytics, oil-prices, overseas-demand, record-exports, united-technologies, us-trade-deficit, yuan-policy


U. S. trade gap worsens in March despite record exports

Soaring oil prices outstripped a record level of exports, widening the March U. S. trade deficit more than economists had expected.  The deficit in international trade of goods and services rose 6% to $48.18 billion from a downwardly revised $45.44 billion in February, the Commerce Department said Wednesday.

U. S exports grew 4.6% to a record high of $172.67 billion from $165 billion the previous month. Imports rose 4.9% to $220.85 billion from $201.44 billion in February.  Strong overseas demand for autos, chemicals and industrial machinery drove exports.  Record sales to emerging South American economies and the highest European Union purchases in three years boosted export numbers.

The March deficit exceeded the $47.5 billion that economists had expected, as reflected in a survey of economists by the Dow Jones News Wire.

Crude oil costs rose above $100 per barrel for the first time in more than a year, and a 9.4% drop in the dollar kept the cost of imports high.

“With higher oil prices we’re likely to see the deficit widen a bit in the near term, said Gus Faucher, director of macroeconomics at Moody’s Analytics, Inc. “We’re going to see the deficit stay within this range.  The weaker dollar will help support exports and limit import growth somewhat.”

On a bright note, the trade deficit with number two trade partner China improved in March, contacting 4% to $18.8 billion as exports rose 12.8% to $9.52 billion.   Imports increased 1.2% to $27.60 billion. Government officials from China and the U.S. met in Washington this past week to discuss China’s currency policy.  Surging commodity prices in China is adding pressure to Chinese officials to allow the Yuan to rise faster against the dollar in order to combat inflation.

Likewise, the gap with number one trade partner Canada narrowed by 6.3 % as exports reached record levels.

On the negative side, the trade gap with Mexico rose 17.2% to $6.17 billion. The trade gap with Japan rose 15.6% to $6.06 billion, and the deficit with the Euro area increased to $8.15 billion from $6.23 billion.

“As we look across the globe, we see end markets are improving,” said Gregory Hayes, chief financial officer of appliance conglomerate United Technologies. “Emerging markets continue to lead worldwide economic growth and United Technology’s businesses are capitalizing on this opportunity.”

RJ & Makay

 

Sources:

 

U. S. trade gap widens (http://online.wsj.com/article/SB10001424052748703730804576316900386515500.html).  WSJ, May 11, 2011

Trade deficit in U. S. widened in March on oil imports (http://www.bloomberg.com/news/2011-05-11/trade-deficit-in-u-s-widens-more-than-estimated-on-surge-in-oil-imports.html).  Bloomberg, May 11, 2011



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