U.S. trade deficit little changed, at $45.6 billion in August

The U.S. trade deficit was little changed at $45.6 billion in August.

The shortfall compared with a median projection of $45.8 billion in a Bloomberg News survey of economists. Exports were little changed at $177.6 billion, while imports totaled $223.2 billion, the Commerce Department said in Washington.

America's smaller trade bill in the first two months of the third quarter may help add to economic growth. Some companies such as Alcoa Inc. are seeing sustained demand from emerging markets such as China at a time when American consumers and companies lack the confidence to increase spending.

“The trade deficit may continue to narrow through the year and contribute modestly to GDP growth,” Sal Guatieri, a senior U.S. economist at BMO Capital Markets in Toronto, said before the report. “As long as Europe's economy doesn't fall off a cliff, we should see reasonable growth in U.S. exports in the face of subdued import growth.”

The trade gap was projected to widen from an initially reported $44.8 billion in July, according to the median forecast of 81 economists surveyed by Bloomberg. Estimates ranged from deficits of $48.4 billion to $42 billion.

After eliminating the influence of prices to render the figures used in calculating gross domestic product, the trade deficit averaged $46.5 billion in the first two months of the third quarter. The number was less than the $47.3 billion deficit average in the second quarter, indicating trade will be a source of strength for the economy this quarter.

Crude Oil Imports

The Commerce Department's figures today showed American refiners imported more crude oil and shipped more refined petroleum product abroad in August.

The increase in demand for crude oil came as the price per barrel dropped. The average price of a barrel of imported oil was $102.62 compared with $104.27 in July, today's report showed. U.S. companies imported 302,481 barrels in August, the most in a year.

Exports were also boosted by other industrial supplies such as coal and steelmaking materials. American companies also exported more consumer goods, including pharmaceuticals.

In addition to crude oil, the U.S. import bill was boosted by chemicals, foods and metals.

A stagnate labor market is weighing on the ability of U.S. households to spend on imported merchandise. The unemployment rate held at 9.1 percent in September for a third straight month, Labor Department figures showed Oct. 7. Consumer goods imports declined in August by $784 million to $42.5 billion, today's figures showed. Imports of automobiles and parts also fell.

European Demand

Exports may be held back amid concerns of a European default and the effect on demand in those countries.

Alcoa, the largest U.S. aluminum producer, this week posted profit that trailed analysts' estimates, saying European customers cut orders on economic uncertainty.

“Fearful of a slowing economy, our European customers reduced their orders dramatically, even into September,” Chief Financial Officer Charles McLane said on a conference call.

Still, Alcoa forecast that China, the world's largest user of aluminum, will see demand rise 17 percent this year compared with a previous projection of 15 percent.

Overseas sales also remain a source of strength for General Electric Co.

“We still see robust demand for our infrastructure products,” in the face of “the global volatility,” Jeffrey Immelt, chairman and chief executive officer of GE, said Sept. 26 in Pune, India. “We still feel quite good about our prospects on a global basis.”

U.S. Dollar

A strengthening in the U.S. dollar over the last couple months may make American-made goods more expensive for overseas customers. Since late July, the dollar has gained about 6.2 percent against a basket of currencies of major trading partners after falling 9.1 percent in the prior 12 months.

Today's figures showed the trade deficit with China rose to a record $29 billion as imports from the nation were the highest ever.

The U.S. Senate passed a bill this week that would allow companies to seek duties to compensate for “misaligned” exchange rates. Some U.S. lawmakers and business executives say the Chinese yuan is undervalued and unfairly boosts that country's exports. House Speaker John Boehner said yesterday that he has “grave concerns” with the bill, casting doubt on whether it will become law.

The deficit with Canada narrowed to $2.4 billion, while the gap with Mexico widened to $5.5 billion. The shortfall with the European Union was $9 billion in August after $8.9 billion a month earlier. The U.S. had a $1.7 billion surplus with Brazil.