US trade gap widens on imports

WASHINGTON: The trade deficit in the US widened in March to the highest level in more than a year as imports climbed faster than exports, adding to evidence of the global recovery from the worst recession in the post-World War II era.

The gap grew 2.5% to $40.4 billion, in line with the median forecast in a Bloomberg News survey, Commerce Department figures showed on Wednesday in Washington. The value of goods sold overseas and those purchased abroad, led by a surge in oil demand, rose to the highest levels since October 2008.

A rebounding American consumer, combined with business spending on equipment and inventories, means imports may keep growing. Exports will probably also improve as expanding economies in Asia and Latin America, which are giving companies such as Cummins and Dow Chemical Co a lift, counter any drag from Europe as the debt crisis hurts the euro.

“Imports will continue to outpace exports as the US recovery broadens,” said Harm Bandholz, chief US economist at UniCredit Research in New York. “The global recovery bodes well for US exports,” he said, and “the direct impact of the woes in Europe should be limited”.

Stocks climbed and the dollar rallied against the yen on signs of a pick-up in global economic growth. The Standard & Poor’s 500 Index also rose. The dollar increased 0.5% to 93.13 yen. The trade gap was projected to widen to $40.5 billion, according to the median forecast in the survey of 80 economists. Estimates ranged from deficits of $36.2 billion to $42 billion. The Commerce Department revised the February shortfall down to $39.4 billion from a previously estimated $39.7 billion.

Imports climbed 3.1% in March to $188.3 billion, led by a $2.76 billion surge in crude oil purchases and increasing demand for foreign-made automobiles. The rise in oil reflected higher prices and volumes, and helped push US imports from Mexico to a record. The average price of a barrel of crude for the month was $74.32, the highest since October 2008.

Trading on the New York Mercantile Exchange indicates prices climbed even higher in April before retreating so far this month on concern the need to reduce government debt in countries like Greece and Portugal will slow European economies. Excluding petroleum, the trade gap shrank to $15.6 billion from $16.4 billion in February.
A strengthening US economy will keep drawing in more products from abroad. Consumer spending, which accounts for about 70% of the world’s largest economy, rose in the first three months of the year by the most since 2007.