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| U.S. Trade Deficit Shrinks as Exports Climb |
| 2007-09-11 |
| The U.S. trade deficit unexpectedly narrowed in July as Boeing Co., General Electric Co. and Deere & Co. shipped more airplanes, engines and tractors overseas. Surging exports may help cushion the U.S. economy from the impact of higher borrowing costs, weakening employment and waning consumer confidence. Exports reached records in each of the past five months, buoyed by the strongest global expansion since the 1970s and a weaker dollar. The gap shrank 0.3 percent to $59.2 billion from a revised $59.4 billion in June that was bigger than previously estimated, the Commerce Department said today in Washington. Economists anticipated a shortfall of $59 billion. Sales overseas climbed 2.7 percent, the most in three years, while imports rose 1.8 percent to $196.9 billion, also a record. The increase in imports reflected greater purchases of crude oil, drilling equipment and appliances. Overall demand for foreign-made capital goods slackened, led by a drop in computers. The trade forecast was based on the median estimate of 70 economists surveyed by Bloomberg News. Projections ranged from deficits of $57.5 billion to $61.5 billion. The June deficit was initially reported at $58.1 billion. The dollar remained lower against the euro after the report, trading at $1.3831 at 12:18 p.m. in New York, from $1.3802 late yesterday. The inflation-adjusted deficit, used to calculate growth, shrank to the smallest in three years. American exports are benefiting from a decline in the dollar, which makes U.S. goods cheaper for foreign buyers. The dollar is down 7.9 percent since the beginning of 2006 against a basket of currencies from major trading partners, according to the Federal Reserve's Trade Weighted Broad Dollar Index. Faster growth overseas is also protecting U.S. companies from slower demand at home. In the second quarter, China expanded 11.9 percent from a year earlier, the most in more than 12 years, and India grew at a 9.3 percent rate. Argentina's economy, the second-biggest in South America, will expand more than 8 percent this year, the government said on Sept. 5. The growth rates compare with a 1.9 percent pace of expansion in the U.S. and a 2.5 percent gain in the 13 countries using the euro. Chicago-based Boeing is among the companies seeing overseas demand growing. The world's second-biggest airplane maker after Airbus SAS won a $1.9 billion order in August from Xiamen Airlines of China for 25 craft. Boeing delivered 25 planes to foreign buyers in July, up from 21 in June. Last month, overseas deliveries rose to 30. GE projects that as much as 60 percent of sales may come from outside the U.S. within five years, from 50 percent now, as it sells electronics and engines to emerging markets such as India and China. Deere, the world's largest farm-equipment maker, increased its full-year profit forecast last month after third-quarter earnings rose 23 percent on orders for tractors overseas. Deere's sales of machinery outside the U.S. jumped 30 percent. The trade gap with China, the second-largest U.S. trading partner after Canada, increased 13 percent to $23.8 billion in July, second only to the record $24.4 billion reached in October 2006. Trade with China has become a politically sensitive issue as some policy makers and manufacturers say that country has kept its currency, the yuan, artificially low to stimulate demand. Treasury Secretary Henry Paulson has urged China to let its currency rise more. China reported today that its trade surplus in August widened 33 percent to $24.97 billion from a year earlier, the second-highest monthly total. The surplus with the U.S., $15 billion, accounted for more than half the total. The figures reported by China and the U.S. don't match because of differences in methodology. Oil imports will remain a concern as prices continue to climb. The cost of imported petroleum surged 7 percent in July after a 4.4 percent gain the prior month, Labor Department figures show. Prices have increased even more since. After eliminating the influence of prices, which are the trade numbers used to calculate gross domestic product, the deficit narrowed in July to $53.5 billion, the lowest since September 2004. |
| Posted by:lotp |
| #2 U.S. Trade Deficit Shrinks as Exports Climb I blamed Deficit Shrinkage on the ex-wife. |
| Posted by: Red Dawg 2007-09-11 17:45 |
| #1 I blame Bush. |
| Posted by: Nimble Spemble 2007-09-11 14:49 |