Washington, March 12 (Bloomberg) -- The U.S. trade deficit narrowed in January as exports rebounded from an eight-month low, economists said they expect the government to report today. The deficit in goods and services was probably $43.4 billion during the month after a record $44.2 billion gap in December, a Bloomberg News survey found. Americans imported more autos and other consumer goods in the final month of 2002 than ever before, while exports dropped 2.6 percent to the lowest since April. In the past year, the dollar declined 26 percent against the euro and 9 percent against the yen, making American-made goods less expensive overseas compared with goods produced by European and Japanese competitors. That may lead to higher export orders over the course of this year and help support economic growth.
``There are early signs in orders surveys that the declining dollar may soon stimulate exports,'' said Peter Kretzmer, a senior economist at Banc of America Securities in New York. ``As a result, we expect the trade and current account deficits to peak in the current quarter.'' The Commerce Department is to issue the report at 8:30 a.m. Washington time. The projected narrowing of the trade gap is based on the median of 60 forecasts in the Bloomberg survey of economists. The widening deficit has restrained growth for seven consecutive quarters. The Institute for Supply Management's January factory index signaled a rebound in exports from the December lull. The group's export index rose to 55.6 in January, the highest since November 1999, from 52.5 in December. A reading greater than 50 signals that orders are rising. The export index held its gains last month, easing to 55.5.
Farm Equipment Exports
Deere & Co., the world's biggest maker of farm equipment, last month said income in its fiscal first quarter ended in January improved as European demand for tractors rose. The drop in the value of the dollar against the euro helped lift overseas sales by 19 percent, the Moline, Illinois-based company said. Sales of farm equipment in the U.S. and Canada will be little changed this year compared with 2002 because of dry weather, while sales in Western Europe will grow, Deere said. Demand for imports is expected to remain near the December rate. Rising petroleum prices will bump up the value of oil imports while shipments of other foreign-made goods slow, economists said. The prospect of war with Iraq and supply disruptions because of political turmoil in Venezuela caused imported petroleum prices to jump 12.4 percent in January after rising 6.2 percent the previous month.
Oil Prices
The April Brent crude-oil futures contract rose 10 percent last month on the International Petroleum Exchange. The price reached $34.26 a barrel yesterday, the highest since September 2000. Because the U.S. economy is expanding faster than those of its trading partners, economists don't expect a swift narrowing in the deficit. The U.S. economy is expected to grow 2.6 percent this year and Japan, the world's second-biggest economy, is seen expanding 0.8 percent, according to consensus estimates of economists polled by Blue Chip Economic Indicators this month. The economy of the 12 nations that share the euro is projected to grow 1.3 percent. ``With the U.S. economy remaining relatively robust internationally, the trade deficit will narrow only gradually,'' said Banc of America's Kretzmer. //www.quote.bloomberg.com