By Bob Willis
Sept. 10 (Bloomberg) -- The U.S. trade deficit was probably little changed in July as imports and exports both grew, signaling a revival of commerce as the global recession eased, economists said before a report today.
The gap between imports and exports increased 1.1 percent to $27.3 billion, according to the median of 74 estimates in a Bloomberg News survey. The deficit has widened since reaching $26 billion in May, the lowest level since November 1999.
Rising demand for U.S.-made goods from trading partners such as China, Mexico and the European Union is combining with domestic stimulus measures to help pull the world’s biggest economy out of its worst slump since the Great Depression. Finance chiefs from the Group of 20 nations meeting in London last week vowed to sustain efforts to boost growth worldwide.
“The global economy has clearly stabilized and global trade will certainly come back,” said Jay Bryson, chief global economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “Most areas are starting to see positive growth rates again.”
The Commerce Department’s report is due at 8:30 a.m. in Washington. Estimates in the survey ranged from deficits of $25 billion to $30.3 billion.
The U.S. trade gap may have widened again last month as the “cash-for-clunkers” program sparked a surge in purchases of vehicles made overseas. Rising oil prices probably also added to the cost of imports. With economists predicting the U.S. economy will grow at an average 2.1 percent rate in the second half of this year, imports will probably climb further.
Oil Effect
A drop in oil prices during July may have limited import gains, according to analysts including Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado.
Crude oil on the New York Mercantile Exchange averaged $64.29 a barrel in July, down from an average $69.70 in June. Oil rose again in August, averaging $71.14 a barrel, which likely raised last month’s import bill further.
Alcoa Inc., the largest U.S. aluminum producer, is among companies profiting from rising demand for commodities. Alcoa last week raised its 2009 forecast for global aluminum consumption because of demand triggered by China’s 4 trillion yuan ($586 billion) in stimulus spending.
Chief Executive Officer Klaus Kleinfeld said he expects China’s consumption of the metal to rise 4 percent this year, compared with an earlier prediction of zero growth.
China ‘Back’
“China is back,” Kleinfeld said in an interview. “They had a lot of shovel-ready projects” planned for 2011 that are being started now in response to the global economic slowdown. “Also, the perceived deficiencies in the social network have been improved with the stimulus program, and that directly leads to people looking to upgrade from motorcycles to cars.”
The Paris-based Organization for Economic Cooperation and Development cut its estimate for contraction this year in the world’s leading industrial countries to 3.7 percent from 4.1 percent, while predicting a “modest” return to growth.
U.K. Prime Minister Gordon Brown on Sept. 5 warned against a premature end of emergency spending and rescue programs aimed at pulling the global economy out of its worst slump since the Great Depression.
“It would be an error of historic proportions if we were to repeat the errors of the 1930s,” Brown told Group of 20 finance ministers at the opening of their meeting in London. “The risks still very much remain. To start now reversing the extraordinary measures would be a serious mistake.”
‘Pronounced Recovery’
The U.S. economy will start to recover by year end, helped by “remarkable growth” in productivity, former Federal Reserve Chairman Alan Greenspan said yesterday in a speech in New York. Greenspan predicted “a fairly pronounced recovery not only in the U.S.,” but globally. “Surprises are on the upside,” he said.
Separately, the Labor Department at 8:30 a.m. will probably report that fewer Americans filed first-time jobless claims last week. The total number of people collecting benefits in the prior week was little changed from 6.23 million, the survey showed. Applications for benefits probably fell to 560,000, the lowest level in five weeks, from 570,000.
U.S. stocks have surged since March on signs the recession is easing. The Standard and Poor’s 500 Index has gained 53 percent from a 12-year low reached on March 9, and the Dow Jones Industrial Average has gained 46 percent. The S&P 500 closed at 1,033.37 yesterday in New York; the Dow closed at 9,547.22.
Bloomberg Survey
=======================================================
Trade Initial Cont.
Balance Claims Claims
$ Blns ,000’s ,000’s
=======================================================
Date of Release 09/10 09/10 09/10
Observation Period July 5-Sep 29-Aug
-------------------------------------------------------
Median -27.3 560 6200
Average -27.4 560 6198
High Forecast -25.0 570 6300
Low Forecast -30.3 535 6050
Number of Participants 74 44 15
Previous -27.0 570 6234
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4CAST Ltd. -27.5 565 ---
Action Economics -27.0 560 6240
AIG Investments -25.0 --- ---
Aletti Gestielle SGR -27.0 555 ---
Ameriprise Financial Inc -28.0 545 6050
Argus Research Corp. -29.5 --- ---
Banesto --- 565 ---
Bank of Tokyo- Mitsubishi -28.1 --- ---
Barclays Capital -27.5 565 ---
BBVA -27.1 560 6200
BMO Capital Markets -28.0 550 ---
BNP Paribas -26.5 560 ---
Briefing.com -25.5 565 6150
Calyon -26.5 --- ---
Capital Economics -29.0 --- ---
CIBC World Markets -29.0 --- ---
Citi -27.0 535 6130
ClearView Economics -28.0 --- ---
Commerzbank AG -28.0 565 ---
Credit Suisse -29.0 555 ---
Daiwa Securities America -28.0 --- ---
DekaBank -28.0 --- ---
Desjardins Group -26.2 560 ---
Deutsche Bank Securities -27.5 --- ---
Deutsche Postbank AG -26.0 --- ---
DZ Bank -28.0 --- ---
First Trust Advisors -27.4 566 ---
Fortis -26.6 --- ---
Goldman, Sachs & Co. -28.0 --- ---
Helaba -28.5 570 ---
Herrmann Forecasting -28.6 554 6221
High Frequency Economics -28.0 570 ---
HSBC Markets -27.0 560 6200
IDEAglobal -27.5 565 ---
IHS Global Insight -30.3 --- ---
Informa Global Markets -27.0 565 6210
ING Financial Markets -30.0 --- ---
Insight Economics -26.0 570 6300
Intesa-SanPaulo -27.5 --- ---
J.P. Morgan Chase -26.5 560 ---
Janney Montgomery Scott L -26.5 --- ---
Johnson Illington Advisor -27.0 --- ---
Landesbank Berlin -25.5 560 ---
Landesbank BW -30.0 --- ---
Maria Fiorini Ramirez Inc -26.5 560 ---
Merrill Lynch/BAS -29.0 540 ---
MFC Global Investment Man -28.0 550 6250
Mizuho Securities -29.0 570 ---
Moody’s Economy.com -26.5 565 6200
Morgan Keegan & Co. -25.0 --- ---
Morgan Stanley & Co. -29.0 565 ---
National Bank Financial -26.5 --- ---
Natixis -28.4 --- ---
Nomura Securities Intl. -26.3 --- ---
Nord/LB -28.0 570 ---
PNC Bank -28.5 --- ---
Raymond James -26.4 535 ---
RBC Capital Markets -26.5 552 ---
RBS Securities Inc. -28.7 560 ---
Ried, Thunberg & Co. -26.0 565 ---
Schneider Foreign Exchang -26.2 560 6215
Scotia Capital -26.5 570 6250
Societe Generale -28.0 --- ---
Standard Chartered -26.0 --- ---
Stone & McCarthy Research -26.3 550 ---
TD Securities -26.5 560 6200
Thomson Reuters/IFR -26.0 560 ---
Tullett Prebon -27.0 556 ---
UBS -27.0 560 ---
University of Maryland -28.8 --- ---
Wells Fargo & Co. -29.2 --- ---
WestLB AG -26.8 --- ---
Westpac Banking Co. -28.5 560 ---
Woodley Park Research -26.3 --- ---
Wrightson Associates -26.0 565 6150
=======================================================
To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net
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