Opening market mover: <Strong Economy, Oil Push Trade Gap to
Record
Wednesday May 12, 9:21 am ET
By Doug Palmer
WASHINGTON (Reuters) - The U.S. trade deficit widened a surprisingly large 9.1 percent in March to a record $46.0 billion as a strengthening world economy and a 21-year peak in oil import prices helped push exports and imports to new highs, a government report showed on Wednesday.
The monthly trade gap was well above pre-report Wall Street estimates of $42.6 billion.
"That's a pretty big deficit," said Patrick Fearon, an economist with A.G. Edwards and Sons in St. Louis. "The economy is rapidly improving. That means people have income to purchase more goods from abroad," even with the U.S. dollar's weakness making imports more expensive.
The record U.S. trade deficit shown in the Commerce Department's report put downward pressure on the dollar in early trading against the euro and the yen.
Buoyed by the highest import prices for oil since February 1983 and the strengthening U.S. economy that fueled domestic demand for goods and services, total imports jumped 4.6 percent to $140.7 billion. The monthly rise in imports was the biggest in 11 years.
"The imports are particularly strong in the consumer goods and capital goods areas, which is further evidence of powerful domestic demand growth," said Pierre Ellis, senior international economist with Decision Economics in New York.
The U.S. trade deficit with OPEC (News - Websites) countries hit a record $5.6 billion as measured on a census basis, with imports from those oil-producing countries at $7.4 billion. The total oil import bill from OPEC and others jumped more than 20 percent in March to a record $10.2 billion.
But a second government report released on Wednesday showed U.S. oil import costs retreating in April for the first time in seven months, while overall import prices rose moderately. The Labor Department's report on import and export prices showed the cost of petroleum products imports fell 0.8 percent in April after a revised 5.2 percent gain in March.
Meanwhile, the trade report said U.S. exports leaped 2.6 percent to a record $94.7 billion. The weaker dollar and stronger global economic growth spurred U.S. exports of industrial supplies and materials and an array of consumer and capital goods.
U.S. exports to the European Union (News - Websites) and China set new records in March, while shipments to Japan were the highest in three years.>
biz.yahoo.com |
