Trade Deficit in U.S. Plunges on Record Petroleum Exports
By Shobhana Chandra - Feb 8, 2013 2:46 PM GMT+0100
Tim Rue/Bloomberg
The gap shrank 20.7 percent to $38.5 billion, lower than any estimate in a Bloomberg survey of 73 economists and the least since January 2010, Commerce Department figures showed today in Washington.
The trade deficit in the U.S. narrowed more than forecast in December, led by record exports of petroleum that gave the world’s largest economy a boost at the end of 2012.
Feb. 8 (Bloomberg) -- Leland Miller, president of China Beige Book International, talks about the outlook for China's economy. Miller speaks with Tom Keene, Sara Eisen, Hans Nichols and Scarlet Fu on Bloomberg Television's "Surveillance." (Source: Bloomberg)
Dec. 12 (Bloomberg) -- John Mauldin, president of Millennium Wave Advisors, talks about the U.S. economy, fiscal policy and investment strategy. Mauldin speaks with Tom Keene and Sara Eisen on Bloomberg Television's "Surveillance." (Source: Bloomberg)
The gap shrank 20.7 percent to $38.5 billion, lower than any estimate in a Bloomberg survey of 73 economists and the least since January 2010, Commerce Department figures showed today in Washington. The jump in fuel sales to overseas buyers, combined with purchases of the fewest barrels of imported crude in almost 16 years, led to the smallest petroleum deficit since August 2009.
The figures probably mean the economy managed to eke out a gain in the fourth quarter of last year, revised data may show later this month, even as military spending dropped by the most since the Vietnam War era. Record exports to South and Central America and to Newly Industrialized Countries including South Korea and Singapore indicate American companies such as Caterpillar Inc. will benefit from improving global growth.
“The improvement in exports is encouraging,” said Brian Jones, a senior U.S. economist at Societe Generale in New York, who projected the gap would drop to $43.3 billion, the third- lowest in the Bloomberg survey. “With Europe looking less weak and Asia getting better, the outlook for U.S. exports has got to be pretty positive.”
Stock-index futures remained little changed after the figures as investors watched corporate earnings. The Standard & Poor’s 500 Index maturing in March rose less than 0.1 percent to 1,506.3 at 8:44 a.m. in New York.
Survey Results
The median forecast in the Bloomberg survey of economists called for the deficit to shrink to $46 billion. Estimates ranged from gaps of $42.3 billion to $48 billion. The Commerce Department revised the November shortfall to $48.6 from an initially reported $48.7 billion.
For all of 2012, exports climbed 4.4 percent to a record $2.2 trillion. Imports advanced 2.7 percent to $2.74 trillion. That pushed the trade gap last year down to $540.4 billion from $559.9 billion in 2011.
In December, exports increased 2.1 percent to $186.4 billion, the second-highest on record after September’s $187.1 billion.
Imports dropped 2.7 percent to $224.9 billion in December. The decrease reflected a plunge in purchases of barrels of crude oil, which dropped to the lowest level since February 1997.
Economy Shrinks
A Commerce Department report on Jan. 30 showed the economy shrank at a 0.1 percent annual rate in the final three months of the year, as the biggest plunge in defense outlays in 40 years swamped gains in consumer and business spending. Exports fell at a 5.7 percent annual rate, the biggest drop since the first three months of 2009, causing a widening of the trade gap that trimmed gross domestic product by 0.25 percentage point, it said.
A weaker U.S. currency will make American exports more attractive to overseas buyers. As of Feb. 1, the dollar had dropped 4 percent from last year’s peak on June 1 against a trade-weighted basket of currencies from its biggest trading partners, according to Federal Reserve data.
Caterpillar, the world’s largest maker of construction and mining equipment, may benefit from improving prospects in the U.S. and abroad.
‘Increasingly Optimisitc’
“The key phrase here when we talk about the world economy in 2013 is a bit better but still weak,” Michael DeWalt, a spokesman for the Peoria, Illinois-based manufacturer, said during a Jan. 28 earnings teleconference. “In the United States, we’re becoming increasingly optimistic,” and “in China, we’re expecting improvement in 2013,” he said.
China, the world’s second-biggest economy, accelerated in the final three months of 2012 for the first time in two years. The growth momentum is “relatively strong,” its central bank said this week, while warning that inflation risks may rise.
The 17-nation euro economy also is starting to stabilize after the sovereign debt crisis drove it into a recession last year. Economic weakness will prevail only “in the early part” of this year, European Central Bank President Mario Draghi said at a press conference in Frankfurt yesterday. “Later in 2013, economic activity should gradually recover, supported by our accommodative policy stance.”
Draghi signaled that policy makers are concerned the strength in the euro, which reached a 14-month high against the dollar this month, will hamper their efforts to pull the region’s economy out of the slump.
Concern about Europe is among reasons some American companies like Cummins Inc., a Columbus, Indiana-based maker of engines for trucks and power-generation equipment, are cautious.
“We start 2013 with a high degree of uncertainty about business conditions in several markets,”Thomas Linebarger, chairman and chief executive officer, said on a Feb. 6 earnings call. “In Europe, it’s hard to see a catalyst for growth in the near term.”
To contact the reporter on this story: Shobhana Chandra in Washington atschandra1@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
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