Trade gap in U.S. little changed as exports, imports stall

The trade deficit in the U.S. was little changed in August as imports and exports stalled, indicating a loss of momentum in global economic growth.

The gap increased 0.4% to $38.8 billion from a revised $38.6 billion in July that was smaller than previously reported, the Commerce Department reported today in Washington. The median forecast in a Bloomberg survey of 71 economists called for a $39.4 billion deficit.

Overseas economies that are struggling to gain traction and fiscal gridlock in the U.S. are probably holding back consumer spending heading into the holiday season, slowing imports. At the same time, the report showed imports of capital goods climbed to the highest level in more than a year, indicating American companies were looking to invest in new equipment before the partial government shutdown.

“It’s going to be tough for us to grow exports,” Jay Bryson, global economist at Wells Fargo Securities LLC in Charlotte, North Carolina, said before the report. “That’s going to be a real challenge to do unless you really stoke up demand in the rest of the world.” European companies in particular face “a lot of uncertainty,” he said.

Another report showed more Americans than forecast filed applications for unemployment benefits last week as California continued to work through a backlog. Jobless claims decreased by 12,000 to 350,000 in the week ended Oct. 19, the Labor Department said in Washington. The median forecast of 48 economists surveyed by Bloomberg called for a decline to 340,000.

Stock Futures

Stock-index futures held earlier gains after the reports. The contract on the Standard & Poor’s 500 Index maturing in December rose 0.2% to 1,745.5 at 8:34 a.m. in New York.

Bloomberg survey estimates ranged from trade deficits of $36 billion to $42 billion. The Commerce Department initially reported a $39.1 billion shortfall for July.

Today’s data, originally set for release Oct. 8, was delayed by a federal budget impasse that led to a partial government shutdown that ended last week.

Exports fell 0.1% to $189.2 billion. Gains in demand from overseas have cooled since exports reached a record $190.5 billion in June. Record foreign purchases of American-made automobiles in August were offset by a plunge in demand for industrial supplies, such as petroleum products and chemicals, the Commerce data showed.

Imports were little changed at $228 billion. The gain in purchases of foreign-made capital goods, including computers and machines, helped make up for a drop in demand for consumer goods and automobiles and parts.

After eliminating the influence of prices, the trade deficit in August was little changed at $47.3 billion. It was also close to the $47.7 billion a month average for the second quarter, indicating trade is so far neither contributing to nor subtracting from U.S. economic growth.

www.bloomberg.com

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