BS: Trade Gap Probably Widened in August on Higher Crude Oil Prices
The U.S. trade deficit probably climbed in August on higher crude oil costs at the same time slower global growth reduced demand for American exports, economists said before a report today.
The gap widened to $44 billion during the month from $42 billion in July, according to the median forecast of 73 economists in a Bloomberg survey. More expensive oil pushed up import prices in September, and claims for jobless benefits rose, figures from the Labor Department may also show.
A stagnant Europe and slower growth in China and other emerging markets may be starting to curtail demand for U.S. products, a source of strength for the expansion in the second quarter. At the same time, the pickup in the price of fuel may push up the nation’s import bill and costs for American companies.
“Exports grew weakly because of the spreading economic weakness in Europe and Japan and slowing growth elsewhere in the world,” said Steven Wood, chief economist at Insight Economics LLC in Danville, California. “Imports increased despite the recent slowing in domestic demand because of higher energy prices and volumes.”
The Commerce Department’s trade report is due at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from gaps of $47.5 billion to $41 billion.
Price increases for fuel from overseas probably pushed up the value of imports. The active contract on Brent oil on the London-based ICE Futures Europe exchange climbed to $114.57 at the end of August, from $104.92 on July 31.
The pickup in oil costs extended into September, a Labor Department report at 8:30 a.m. is projected to show. The import price index climbed 0.7 percent for a second straight month, according to the median estimate in a Bloomberg survey.
Import Prices
Excluding oil, the cost of goods and materials the U.S. purchases from abroad may be restrained as cooling overseas markets limit demand for commodities like metals. Even the higher energy prices may be difficult for U.S. companies to pass on to consumers as weak job growth puts pressure on sales.
The import-price index is the first of three monthly price reports from the Labor Department. The producer price gauge is due tomorrow, and the consumer-price index, the broadest of the measures, will be released on Oct. 16. The figures are projected to be consistent with Federal Reserve policy makers’ view that inflation will remain subdued.
Another Labor Department report today may show first-time claims for jobless benefits climbed to 370,000 last week from 367,000, economists predicted. The increase highlights uneven improvement in the labor market. Last week, the agency said the jobless rate fell to 7.8 percent, the lowest since January 2009, while employers added 114,000 jobs.
The slackening world economy is weighing on sales at companies such as Caterpillar Inc. (CAT), which cut its forecast for 2015 earnings after commodity producers reduced capital spending. The world’s biggest construction and mining equipment maker said profit will be $12 to $18 a share, compared with previous projections of $15 to $20.
Peoria, Illinois-based Caterpillar is forecasting moderate and “anemic” growth through 2015, Chairman and Chief Executive Officer Doug Oberhelman said Sept. 24 in a presentation to analysts at a conference in Las Vegas. Construction in emerging markets will probably show modest improvements, he said.
“We’ve seen a slowing in economic growth that was more than we expected,” he said. “We think ’13 could look like 2012 in terms of worldwide economic growth.”
The International Monetary Fund on Oct. 9 cut forecasts for global growth to 3.3 percent this year, the slowest since the 2009 recession, and said there are “alarmingly high” risks of a steeper slowdown. The Washington-based lender projects the 17- country euro area economy will contract 0.4 percent in 2012, worse than its prior forecast, while the U.S. will expand 2.2 percent, faster than an earlier prediction.
“The U.S. itself is doing OK, not great, but we’re not looking at a recession,” said Michael Gapen, a senior economist at Barclays Plc in New York. “Europe is in a minor recession and China is slowing. Exports are a challenge.”
