U.S. Economy: Trade Deficit Unexpectedly Shrinks (Update1)
March 11, 2010, 12:50 PM EST(Adds report on household wealth in seventh paragraph.)
By Shobhana Chandra
March 11 (Bloomberg) -- The trade deficit in the U.S. unexpectedly narrowed in January as imports fell for the first time in five months, indicating demand is cooling following the fastest pace of growth in six years.
The gap shrank 6.6 percent to $37.3 billion from $39.9 billion in December as refineries imported the fewest barrels of crude oil in a decade, Commerce Department figures showed today in Washington. Exports decreased for the first time in nine months, on fewer shipments of aircraft and autos.
“The somewhat disappointing trade data seem likely to prove a brief pause in a generally improving trend,” said David Resler, chief economist at Nomura Securities International Inc. in New York. “Trade flows are notoriously volatile from month- to-month, but declines in both exports and imports are hardly signs of economic vitality.”
Stocks were little changed after U.S. exports slowed and a separate report showed higher-than-estimated inflation in China may prompt the nation to raise interest rates. The Standard & Poor’s 500 Index dropped 0.2 percent to 1,143.31 at 12:44 p.m. in New York.
Jobless Claims
Initial applications for jobless benefits dropped by 6,000 to 462,000 in the week ended March 6, according to figures from the Labor Department. The number of people receiving unemployment insurance increased, while those getting extended benefits fell.
Household wealth in the U.S. grew in the fourth quarter at a slower pace, limited by a drop in home values that indicates consumer spending will take time to strengthen, a separate report showed. Net worth rose by $700 billion to $54.2 billion, the third straight gain, according to the Federal Reserve.
Exports decreased by $500 million, to $142.7 billion. Auto demand from abroad fell by $544 million, while shipments of commercial aircraft declined $474 million. The report showed U.S. sales overseas of pharmaceuticals, computers and telecommunications equipment improved in January.
Boeing Orders
Sales of American-made planes may have rebounded last month. Boeing Co. delivered 23 aircraft for overseas buyers in January, down from 38 the prior month, according to figures from the Chicago-based company. Foreign deliveries climbed to 28 in February.
American-made goods have become more attractive for overseas buyers following a decline in the dollar last year. It has fallen about 11 percent against a trade-weighted basket of currencies from the U.S.’s biggest trading partners from a five- year high reached on March 9, 2009.
San Jose, California-based Cisco Systems Inc., the biggest maker of networking equipment, said it sees “underlying strength” in the economy and that customers are saying they need to spend more on technology.
“We see very positive spending trends across all of our business segments” and across the world, Ned Hooper, who is in charge of Cisco’s consumer unit and mergers and acquisitions, said on March 3 at a conference in San Francisco.
Imports Decline
Imports fell 1.7 percent to $180 billion from $183.1 billion in December. The U.S. imported 245 million barrels of crude oil in January, the fewest since February 1999. The decrease swamped an increase in oil prices.
After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit shrank to $41 billion from $43.8 billion. The January figure was in line with the fourth-quarter average, indicating trade so far is not influencing growth estimates.
The U.S. economy will expand at an average 2.75 percent annual rate in the first half of this year, according to the median estimate of 52 economists in a Bloomberg survey taken from March 1 to March 10.
President Barack Obama said today that his goal of doubling U.S. exports in the next five years is crucial to economic growth. He said he’s creating an export promotion panel, reestablishing a private-sector advisory council and boosting financial support for U.S. exporters.
“We’re at a moment where necessity has tempered the old debates,” Obama said at the annual meeting of the U.S. Export- Import Bank.
--Editors: Vince Golle, Carlos Torres
To contact the reporters on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net
