|
Trade deficit grew to 60b in january 2005 Original Source Link: (May no longer be active)
http://quote.bloomberg.com/apps/news?pid=10000006&sid=aOSsbAm4aqko&refer=homehttp://quote.bloomberg.com/apps/news?pid=10000006&sid=aOSsbAm4aqko&refer=home
U.S. Trade Deficit Grew to $58.3 Bln in January (Update7)
March 11 (Bloomberg) -- The U.S. trade gap widened in January to the second largest ever as imports of foreign-made automobiles and other consumer goods swamped record exports. China, whose textile exports surged after quotas ended this year, accounted for more than a quarter of the shortfall.
Imports of goods and services exceeded exports by $58.3 billion, up 4.5 percent from $55.7 billion in December, the Commerce Department said today in Washington. The January deficit was higher than the median forecast and second only to November's $59.4 billion.
Americans' appetite for new cars, clothes, furniture and televisions caused imports to swell to a record $159.1 billion. Business investment brought January imports of capital goods to the highest in more than four years. A decline in the cost of petroleum kept the gap from widening even more.
``The drop in oil imports in January is a short-term reprieve,'' said Christopher Low, chief economist at FTN Financial in New York, who predicted a January deficit of $59 billion. ``Watch for still bigger deficits in the rest of the first quarter when oil imports rebound.''
Economists at RBS Greenwich Capital in Connecticut and Morgan Stanley in New York reduced their forecasts for gross domestic product this quarter because of the amount of U.S. spending on foreign products.
`Seeping Out'
``Import growth is definitely stronger than anticipated, and that's just another indication of strong demand in the U.S.,'' said Stephen Stanley, chief economist at RBS Greenwich. ``There's a fair amount of demand seeping out of U.S. growth in the form of imports.''
Stanley said the economy is likely to grow at an annual rate of 4 percent this quarter, down from his previous estimate of 4.3 percent. Economists at Morgan Stanley changed their forecast to 4 percent from 4.5 percent. The median forecast in a Bloomberg News survey of economists taken March 1-March 8 called for 4 percent growth.
Imports rose 1.9 percent in January. Exports rose 0.4 percent, a second straight increase, to $100.8 billion. A decline in shipments of capital goods restrained growth in all exports.
The median forecast of 61 economists in a separate Bloomberg News survey called for the trade deficit to widen to $56.8 billion.
Dollar Falls
The dollar fell to near a two-month low against the euro after the report. The euro brought $1.3453 at 3:05 p.m. in New York, compared with $1.3417 late yesterday. The euro earlier touched $1.3482, the lowest since Jan. 4. Versus the yen, the dollar traded at 103.93 from 104.13.
The deficit widened even though the lowest prices per barrel since July caused the value of oil imports to fall. Imported petroleum averaged $35.35 a barrel, compared with $36.63 in December. The total value of crude-oil imports was $11.4 billion, down from $11.8 billion.
Excluding oil, the deficit for goods alone was a record $46 billion. Adjusted for inflation, the deficit was a record $60.1 billion. The deficit for all of last year was a record $617.1 billion, up 24 percent from 2003.
The cost of oil surged this month, with futures closing at almost $55 a barrel March 9 on the New York Mercantile Exchange, close to a record set in October. All commodity prices surged to a 24-year high this week, led by copper and oil, according to the Reuters-CRB index.
`Healthy Demand'
Imports of consumer goods rose 6 percent to $34.6 billion, with gains for apparel, electronic products, furniture and household goods.
``Demand in general is widely diversified and, in general, healthy,'' Brian Halla, chief executive of National Semiconductor Corp., said in a conference call yesterday. ``A wide diversity of consumer electronic products'' is fueling sales.
Santa Clara, California-based National Semiconductor said sales this quarter may beat analysts' estimates. The company has plants in China, Malaysia, Singapore and Scotland, as well as in Maine and Texas.
Automobile and parts imports rose 2.8 percent to a record $19.7 billion.
Nissan Motor Co. and Hyundai Motor Co. sold more cars and trucks in the U.S. in January, giving Asian automakers a record share of the market. Hyundai, South Korea's largest automaker, opens its first U.S. plant this year, in Montgomery, Alabama.
Capital Goods
Imports of capital goods, at $30.7 billion, were the highest since September 2000. Gains included increases for semiconductors, industrial machinery, and aircraft engines.
Exports were led by a 3.5 percent increase in shipments of autos, parts and engines. That helped compensate for the 0.7 percent drop in capital-good exports, including civilian aircraft.
The trade deficit with China widened to $15.3 billion, the largest since November, from $14.3 billion, and up one-third from January 2004. The gap was a record last year.
Chinese exports of shirts, skirts and other apparel to the U.S. rose 39 percent in January from December to $1.9 billion, after a four-decades-old system of worldwide quotas expired Jan. 1 under an agreement with the World Trade Organization.
U.S. Treasury Secretary John Snow, speaking to reporters in San Antonio, Texas, urged China to follow the regulations of the WTO, to which the country was admitted in November 2001, protect against copyright violations and ``move to greater flexibility of their currency.''
The yuan's peg to the dollar helps Chinese exporters by keeping the currency's value artificially low, the U.S. and Japan say.
`Modest Risk'
A decline in the value of the dollar, which makes U.S. exports cheaper may eventually keep the trade deficit from deteriorating, economists said. Free trade will also lead to greater balance, Federal Reserve officials said.
``Should globalization continue unfettered and thereby create an ever-more flexible international financial system, history suggests that current account imbalances will be defused with modest risk of disruption,'' Fed Chairman Alan Greenspan said in a speech to the Council on Foreign Relations in New York late yesterday.
The U.S. dollar dropped 4.6 percent in all of last year against a basket of currencies of major U.S. trading partners, and is little changed so far this year.
Snow today also urged other rich countries to strengthen their economies as a way to promote demand for U.S. exports.
``We have a high propensity to spend and consume,'' he said. ``Part of that becomes consumption of imports. They're creating less disposable income than we are and aren't able to buy as much from us.''
Countries that use the euro as their currency are forecast to grow 1.6 percent this year, according to economists surveyed this month by Blue Chip Economic Indicators.
The deficit is unlikely to close completely, since imports exceed exports by more than 60 percent.
Last Updated: March 11, 2005 15:08 EST
|
|
