Trade gap near record after run on foreign crude
BY MICHAEL MCKEE <a href=www.nwanews.com>BLOOMBERG NEWS Wednesday, May 14, 2003
WASHINGTON — The U.S. trade deficit widened in March to the second largest on record as imports of oil jumped after a petroleum strike in Venezuela and in anticipation of war in Iraq, a government report showed.
The United States imported $43.5 billion more in goods and services than it exported, following a revised $40.4 billion shortfall in February, the Commerce Department said Tuesday. The record deficit was a $44.9 billion gap last December.
Crude-oil imports reached a record in March amid concern that supplies would be disrupted by war. The United States was rebuilding stocks after the two month-Venezuela strike, in December and January.
And, even as a weaker U.S. dollar may boost exports, economists said they expect little narrowing of the trade gap. "Away from energy, we don’t expect much of an improvement in the trade balance over the next few months," said Kevin Logan, senior market economist at Dresdner Kleinwort Wasserstein in New York. "Other economies are still quite weak, with growth very sluggish, so we don’t expect the demand for exports to increase much."
The U.S. economy grew at a 1.6 percent annual rate in the first quarter, according to the government’s first estimate. Japan is expected to have grown just 0.4 percent, according to analysts surveyed by Bloomberg News. And the European Commission said the economy of the dozen nations that share the euro as their currency probably shrank in the first quarter.
The decline in the dollar may have contributed to the 2.9 percent increase in imports to $126.3 billion in March, the second highest on record behind September 2000. Goods ordered months ago and delivered in March cost more because the dollar has fallen 10 percent against the euro this year. Imports from western Europe surged in March to a record as the trade deficit with that region rose to $7.8 billion from $6.6 billion.
The drop in the dollar is expected, eventually, to help exports by making U.S.-made products less expensive internationally. The currency also has declined 11 percent this year against the Canadian dollar and 4.6 percent against a basket of currencies from the biggest U.S. trading partners. "Persistent weakness in the dollar and an expected rebound in overseas growth later this year should help to improve the U.S. trade picture down the road," said Joseph Abate, senior economist at Lehman Brothers Inc. in New York.
The value of crude oil imports surged to a record $9.1 billion in March, from $7.5 billion the previous month. The United States imported 300.7 million barrels of oil for the month, up from 247.1 million in February. The price of crude eased to $30.27 a barrel from $30.46 in February.
Imports of autos and auto parts rose 2.1 percent to $17.2 billion in March.
A record 3.53 million imported vehicles were sold in March, topping the previous record of 3.52 million set in October 2001, when automakers offered zero percent financing to lure buyers after the Sept. 11 terrorist attacks.
Exports rose 0.6 percent to $82.8 billion in March from $82.3 billion the previous month. Shipments abroad of semiconductors, pharmaceuticals and petroleum products all increased.
And exports of consumer goods rose 5.6 percent to $7.3 billion, after falling 7.5 percent in February.
Companies including 3M Co., United Technologies Corp., and Chiquita Brands International Inc. have benefited from the weaker dollar making their goods cheaper overseas and increasing the value of their international sales when they are converted into dollars.