The U.S. trade deficit probably widened in March as rising commodity prices boosted the value of imports, economists said before a report today.
The gap grew by 2.6 percent to $47 billion, the biggest in nine months, from $45.8 billion in February, according to the median forecast of 72 economists surveyed by Bloomberg News.
Crude oil costs that surged above $100 a barrel for the first time in more than a year and a 9.4 percent drop in the dollar will probably keep driving up the cost of imports. At the same time, the weaker currency is making American goods more competitive to customers in emerging markets from Argentina to China, benefiting manufacturers like United Technologies Corp. (UTX) and Caterpillar Inc. (CAT)
“We should see ongoing strength in U.S. exports because of the weakness of the dollar,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “Trade should have a fairly neutral impact on the U.S. economy” as both imports and exports climb.
The Commerce Department’s report is due at 8:30 a.m. in Washington. Estimates ranged from deficits of $43 billion to $49.3 billion. The gap has widened from a decade-low of $24.9 billion reached in May 2009 during the recession.
A barrel of crude oil on the New York Mercantile Exchange averaged $102.98 in March, up from $89.74 in February. It reached an intraday high of $114.83 on May 2 and has since dropped on concern world growth may slow.
Dollar’s Influence
The dollar’s 9.4 percent drop from June 7, 2010, to March 31 against a weighted basket of currencies from the country’s biggest trading partners is making American-made goods cheaper abroad and foreign-made goods more expensive in the U.S.
Combined with growth in emerging economies such as Brazil and India, the decrease in the dollar will probably continue to help lift exports.
United Technologies, maker of Carrier air conditioners, last month said 2011 sales would be at the high end of its forecast as pent-up demand stokes growth globally.
“As we look across the globe, we see end markets are improving,” Chief Financial Officer Gregory Hayes said on an April 20 conference call. “Emerging markets continue to lead worldwide economic growth and UTC’s businesses are capitalizing on this opportunity.”
Manufacturing companies have outperformed the broader market this year. The Standard & Poor’s 500 Industrials Index has gained 11 percent this year, compared with a 7.9 percent increase for the S&P 500 Index.
Global Growth
Caterpillar said it expects global economic growth this year of about 4 percent, with developing countries expanding by 6.5 percent and the U.S. by 3.5 percent. The company plans about $3 billion in capital spending this year, with more than half of that in the U.S.
Caterpillar posted first-quarter profit that topped analysts’ estimates and raised its full-year earnings forecast as sales surged in developing countries. The Peoria, Illinois- based maker of earthmoving equipment said its outlook would have been higher had it not been for the March 11 earthquake in Japan.
“Our facilities in Japan were not damaged by the earthquake and tsunami, but many of our suppliers in Japan were,” Chief Executive Officer Doug Oberhelman said on a conference call April 29. “As a result, we are experiencing sporadic production disruptions at many of our facilities around the world.”
A growing trade deficit with China is prompting U.S. officials to seek a solution. Top-ranking delegates from the two countries met in Washington this week amid U.S. pressure for China to allow the yuan to rise against the dollar.
U.S. Treasury Secretary Timothy F. Geithner and Chinese Vice Premier Wang Qishan pledged May 9 to tackle currency, financial services and trade conflicts between the world’s two biggest economies at the start of the two-day Strategic and Economic Dialogue.
Bloomberg Survey
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Trade Federal
Balance Budget
$ Blns $ Blns
===========================================
Date of Release 05/11 05/11
Observation Period March March
-------------------------------------------
Median -47.0 -41.0
Average -47.0 -50.2
High Forecast -43.0 -35.0
Low Forecast -49.3 -80.0
Number of Participants 72 25
Previous -45.8 -82.7
-------------------------------------------
4CAST Ltd. -47.1 -41.0
ABN Amro -48.3 ---
Action Economics -47.0 -41.0
Aletti Gestielle -47.2 ---
Ameriprise Financial -47.5 ---
Banesto -45.8 ---
Barclays Capital -47.5 -41.0
Bayerische Landesbank -48.0 ---
BBVA -45.3 -45.0
BMO Capital Markets -48.8 -62.5
BNP Paribas -48.5 ---
BofA Merrill Lynch -48.0 -80.0
Briefing.com -45.0 -41.0
Capital Economics -48.5 ---
CIBC World Markets -46.5 ---
Citi -47.0 -40.0
Commerzbank AG -48.5 ---
Credit Agricole CIB -46.8 ---
Credit Suisse -47.0 ---
Daiwa Securities America -48.0 -40.0
DekaBank -47.0 ---
Desjardins Group -48.8 -70.0
Deutsche Bank Securities -44.0 ---
Deutsche Postbank AG -46.0 ---
DZ Bank -47.0 ---
Fact & Opinion Economics -46.0 -62.0
First Trust Advisors -44.3 ---
FTN Financial -46.0 ---
Goldman, Sachs & Co. -48.0 -41.0
Helaba -43.0 ---
High Frequency Economics -43.0 -65.0
Hugh Johnson Advisors -47.0 ---
Ibersecurities -46.0 ---
IDEAglobal -47.5 -60.0
IHS Global Insight -48.0 ---
Informa Global Markets -46.2 -41.0
Insight Economics -47.5 ---
Intesa-SanPaulo -47.0 ---
J.P. Morgan Chase -46.4 -41.0
Janney Montgomery Scott -47.8 ---
Jefferies & Co. -47.5 ---
Landesbank Berlin -46.0 ---
Landesbank BW -45.0 ---
Maria Fiorini Ramirez -47.5 ---
MF Global -47.5 -41.0
Mizuho Securities -48.0 ---
Moody’s Analytics -48.3 ---
Morgan Keegan & Co. -46.6 ---
Morgan Stanley & Co. -45.0 ---
National Bank Financial -48.0 ---
Natixis -46.4 ---
Nomura Securities -43.0 -42.0
Nord/LB -46.2 ---
Parthenon Group -46.9 ---
Pierpont Securities -46.4 -42.0
PNC Bank -48.0 ---
Raiffeisenbank International -46.0 ---
Raymond James -48.5 -41.0
RBC Capital Markets -47.7 ---
RBS Securities -46.5 ---
Scotia Capital -48.0 ---
Societe Generale -47.7 ---
Standard Chartered -47.0 ---
State Street Global Markets -47.4 -70.0
Stone & McCarthy Research -48.9 -35.0
TD Securities -46.0 -62.0
UBS -49.0 -41.0
University of Maryland -48.8 -70.0
Wells Fargo & Co. -49.3 ---
WestLB AG -46.8 ---
Westpac Banking Co. -48.0 ---
Wrightson ICAP -47.0 ---
===========================================
To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net
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