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| US trade deficit probably narrowed in July |
| Bloomberg / Washington Sep 06, 2010, 00:16 IST |
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The trade deficit probably narrowed in July as a slowing economy prompted Americans to buy fewer goods from abroad, economists said before a government report this week.
The gap between imports and exports decreased to $47 billion from $49.9 billion the prior month, according to the median of 60 estimates in a Bloomberg News survey ahead of the Commerce Department’s September 9 report. The deficit swelled by a record $7.9 billion in June.
Demand for overseas products may cool as American consumers and businesses curb spending in coming months, while growing foreign economies mean companies like Caterpillar Inc will see sales climb. Exports will probably be a source of strength for manufacturing as the world’s largest economy tries to sustain a recovery from the worst recession since the 1930s.
“Given the underlying sluggishness in domestic demand, there’s no fundamental support for such high import levels,” said Brian Bethune, chief US financial economist at IHS Global Insight in Lexington, Massachusetts. “We expect to see exports bounce higher and imports begin to decline.”
The trade deficit in June widened as imports jumped and shipments abroad declined, the Commerce Department said last month. The overall gap was the widest since October 2008.
Stocks rallied and Treasuries slumped last week after reports on employment and manufacturing alleviated concerns the US was slipping back into a recession. The Standard & Poor’s 500 gained 3.7 per cent, the best single-week performance in almost two months.
Job gains
The Labor Department on September 3 said private payrolls that exclude government agencies climbed 67,000 in August, after a revised 107,000 gain a month earlier that was larger than initially estimated. The unemployment rate rose to 9.6 per cent as more people looked for work.
Peoria, Illinois-based Caterpillar, the world’s largest construction equipment maker, said last month it may add as many as 9,000 workers worldwide this year as sales climb in developing markets. About 1,250 of the jobs the company has added so far this year have been in the US.
Manufacturing unexpectedly expanded at a faster pace in August as production picked up, a report from the Institute for Supply Management showed last week. At the same time, the group’s services index fell in August to the lowest level in seven months.
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