U.S. trade deficit grew to record $66.1 billion in Sept.

November 11, 2005|By BLOOMBERG NEWS

WASHINGTON — The U.S. trade deficit widened to a record $66.1 billion in September as the value of petroleum imports surged after Hurricane Katrina disrupted production along the Gulf Coast. The decline in exports was the biggest in four years.

Imports rose to a record $171.3 billion in September, the Commerce Department said yesterday, reflecting greater demand for civilian aircraft, televisions, clothing, oil and natural gas.

Imports of petroleum products rose to a record on a seasonally adjusted basis as the average price for the month jumped to a record $57.32 a barrel from $53.65 in August.

Exports slumped to $105.2 billion in September from $108 billion the previous month.

The shortfall in goods and services was bigger than economists had forecast and followed a $59.3 billion deficit in August. The gap with China rose to a record $20.1 billion for the month, highlighting trade tensions as President Bush prepares to travel to Beijing at the end of next week.

The cost of crude oil and other energy products dropped in October, suggesting that the trade gap might narrow in coming months and reinforcing forecasts that the economy is recovering from the hurricanes. A 23 percent decline in gasoline prices since early September has helped consumer sentiment rebound this month, according to a University of Michigan survey.

"The economy was most affected by the hurricanes in September and October, and that effect is starting to fade," said Dean Maki, chief U.S. economist at Barclays Capital in New York. "The November confidence survey shows the importance of the recent decline in gasoline prices, and we believe the consumer spending numbers will be firming" in coming months.

The University of Michigan's consumer confidence index rose to 79.9 this month from a 13-year low of 74.2. Retailers including Amazon.com predict strong holiday sales. The International Council of Shopping Centers said last week that same-store sales will be 3 percent to 3.5 percent higher in November and December than in those months last year, which would exceed last year's increase of 2.3 percent.

Economists expected the trade deficit to widen to $61.5 billion for the month compared with a previously reported $59 billion gap in August, according to the median of 66 estimates in a Bloomberg News survey. The estimates ranged from $58 billion to $65.5 billion.

The nation imported a record $23.8 billion worth of crude oil and petroleum products as prices jumped after Hurricanes Katrina and Rita.

The trade deficit was also widened by a 2.6 percent drop in exports, the biggest decline since September 2001. A strike at Boeing Co. contributed to a 72 percent drop in aircraft exports.

The deficit might not widen much more in coming months, economists said, because oil prices have receded, the Boeing strike was settled, and foreign economies are accelerating, suggesting that exports might rebound.

The October decrease in oil prices caused the costs of goods imported to the United States to decline 0.3 percent, the first drop since May, the Labor Department said in a separate report. Import prices excluding all fuels rose at the same pace as a month earlier, signaling that companies are having limited success in passing on higher raw materials costs to consumers.

In a separate report, the department said first-time claims for unemployment benefits rose by 2,000 to 326,000 as workers displaced by Hurricane Wilma applied for compensation.

The U.S. trade deficit with China, for the first nine months of the year, reached a record $146.3 billion, compared with $114.3 billion a year earlier.

In October, China's trade surplus widened to a record $12 billion as exports of electronics surged, China's customs bureau reported today from Beijing. The surplus compares with $7.56 billion in September.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.