U.S. trade deficit seen widening in April due to oil
Written on June 11, 2009
The U.S. trade deficit likely widened for a second straight month in April, driven by rising energy costs, according to a Reuters poll.
The survey of 68 economists forecast the trade gap swelled to $29 billion from $27.6 billion in March, when the shortfall increased for the first time in eight months. Analysts said this was not a sign of a pick-up in domestic demand as the economy battles a severe recession, now in its 18th month.
The Commerce Department will release the trade data at 8:30 a.m. (1230 GMT) on Wednesday.
“A rebound in the value of petroleum imports is the reason for a larger nominal trade deficit. Petroleum import prices jumped 15.4 percent in April and likely rose by at least that much in May,” said Joseph Brusuelas, an economist at Moody’s Economy.com in West Chester, Pennsylvania.
“With crude oil prices on the rise again, it will be more of a struggle to reduce the trade deficit in the future.”
Crude oil prices have rebounded in recent weeks, hitting seven-month high above $70 per barrel on Friday but edging down to settle at $68.09 per barrel on Monday.
The combination of a domestic economic downturn and global slump depressed U.S. exports and imports of goods and services in the first quarter and analysts will be watching April’s trade data to see if this pattern prevails in the second quarter health insurance plans.
Exports of goods and services dropped at a 28.7 percent annual rate in the January-March quarter, while imports tumbled at 34.1 percent pace.
The decline in exports sliced off a record 3.86 percentage points from the change in overall gross domestic product in the first quarter, while the slump in imports added a record 6.05 percentage points.
The economy contracted at a 5.7 percent rate in the first quarter after shrinking by 6.3 percent in the October to December period.
“Any strength outside oil imports will be treated as a mild plus, people will be saying maybe there is a little better tone to consumer and business spending,” said Cary Leahey, an economist at Decision Economics in New York.
“Net of everything, a rough sense of stability in the trade gap is telling you that the U.S. and global economy are no longer in a free-fall.”
(Reporting by Lucia Mutikani; Editing by James Dalgleish)
Filed in: money.