By Shobhana Chandra May 12 (Bloomberg) -- The trade deficit in the U.S. widened in March to the highest level in more than a year as the cost of imported oil climbed and companies restocked shelves with goods bought abroad. The gap grew 2.5 percent to $40.4 billion, in line with the median forecast of economists surveyed by Bloomberg News and the most since December 2008, Commerce Department figures showed today in Washington. The value of imported crude climbed to the highest level since October 2008. A rebounding American consumer, combined with business spending on new equipment and inventories, means imports may keep growing. Gains in exports, which benefited from expanding economies in Asia that gave companies such as Cummins Inc. and Dow Chemical Co. a lift, will probably be more limited as the European debt crisis pushes the dollar up against the euro. “Both exports and imports are rising rapidly, which is consistent with growth domestically and overseas,” James O’Sullivan, global chief economist at MF Global Ltd. in New York, said before the report. “An element of uncertainty has been added because of the turmoil in Europe,” he said. The trade gap was projected to widen to $40.5 billion, according to the median forecast in a Bloomberg News survey of 80 economists. Estimates ranged from deficits of $36.2 billion to $42 billion. The Commerce Department revised the February deficit down to $39.4 billion from a previously estimated $39.7 billion. Trade Flows Goods and services purchased abroad and those sold overseas both increased to the highest levels since October 2008. Imports climbed 3.1 percent in March to $188.3 billion, led by a $2.76 billion surge in crude oil and increasing demand for foreign-made automobiles. The rise in oil reflected higher prices and volumes, and helped push U.S. imports from Mexico to a record. The average price of a barrel of crude for the month was $74.32, the highest since October 2008. Trading on the New York Mercantile Exchange indicates prices climbed even higher in April before retreating so far this month on concern the need to reduce government debt in countries like Greece and Portugal will slow global growth. Excluding petroleum, the trade gap shrank to $15.6 billion from $16.4 billion in February. A strengthening U.S. economy will keep drawing in more products from abroad. Consumer spending, which accounts for about 70 percent of the world’s largest economy, rose in the first three months of the year by the most since 2007. Business investment in new equipment and software over the past two quarters has put in the biggest back-to-back gain since 2000. Emerging Economies Surging growth in emerging Asian and Latin American countries is propelling demand for U.S. goods. Exports increased 3.2 percent to $147.9 billion, reflecting sales of generators, semiconductors and industrial supplies such as petroleum products. China, the world’s third-biggest economy, expanded 11.9 percent in the first quarter from the same time in 2009, the fastest pace in almost three years. India’s growth rate, which is due May 31, was probably 8.6 percent last quarter, the most since December 2007, government officials have said. Brazil, Latin America’s biggest economy, will expand 6.26 percent in 2010, the fastest pace in 24 years, a central bank survey said this month. The trade surplus with the so-called newly industrialized countries, which include Singapore and Korea, climbed to a record in March. The deficit with China widened. Factory Rebound Increasing demand in Asia and Latin America is behind the more optimistic outlook for companies such as Cummins, a Columbus, Indiana-based maker of diesel truck engines and generators, which raised its sales forecast for 2010. “Our strength in large developing markets such as China, India and Brazil has given us a significant boost as those economies have continued to recover from the recession more quickly than other regions,” Chief Executive Officer Tim Solso said in a statement on April 27. A rebound in the U.S. and overseas markets boosted first- quarter sales by 48 percent at Midland, Michigan-based Dow, the largest U.S. chemical maker. The euro had slumped 11 percent against the dollar so far this year as investors grew more concerned that fiscal turmoil in the region will hamper Europe’s economic recovery. A sustained decline may restrain further progress in U.S. sales overseas. In addition to making American goods more expensive to European buyers, the dollar’s appreciation against the euro will also weigh on sales to economies where American exporters compete with European goods. After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit grew to $43.8 billion in March from $42.3 billion. The March figure was in line with what the government estimated last month, indicating trade will not factor into revisions for first- quarter growth due later this month. To contact the reporters on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

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