The U.S. trade deficit grew in March to a record $46 billion as the highest oil prices in more than two decades and increased consumer spending boosted the value of imports, the Commerce Department reported in Washington. The gap in goods and services trade comes after a deficit of $42.1 billion in February. Imports and exports surged to all-time highs, and the deficit with the Organization of Petroleum Exporting Countries was the biggest ever.
Concern over supplies drove up the price of crude oil in March, while tax refunds, low interest rates and an improved labor market helped lift demand for cars, electronic goods and other products made outside the U.S. Accelerating global growth and a weaker dollar contributed to a rise in U.S. exports, which kept the deficit from widening further, economists said. ``We're sucking in a lot more expensive commodities,'' Kevin Harris, an economist at MCM in New York, said before the report. ``Our economy is thundering along'' and growing faster than the rest of the world. Import prices rose in April for a seventh month, led by higher costs for iron, steel and other raw materials, the Labor Department reported. The 0.2 percent increase in the import price index followed a 0.8 percent gain in March. The index is up 2.4 percent over April 2003, the biggest 12-month gain in a year.
Economists had expected the deficit to widen to $43 billion for the month compared with a previously reported deficit of $42.1 billion in February, according to the median estimate of 64 forecasts in a Bloomberg News survey. Imports rose 4.6 percent for the month to $140.7 billion, the biggest increase since March 1993, when the U.S. was pulling out of a recession. Exports rose 2.6 percent in March to $94.7 billion, including record shipments of automobiles and parts, consumer goods and industrial supplies. Exports of capital goods were the highest since May 2001.
Autos, Parts
Imports of autos and parts rose 3.1 percent in March to $19 billion, the highest ever. The U.S. imported $31.6 billion worth of industrial supplies and materials, which include oil, also a record. The value of U.S. oil imports rose in March to $10.2 billion from $8.4 billion the previous month. The average price of oil was $30.64 a barrel, the highest since February 1983, according to the Commerce Department. That helped widen the deficit with OPEC to $5.6 billion, the largest on record. Oil and gasoline prices rose ahead of OPEC' planned cut in production quotas in April. OPEC produces more than a third of the world's oil.
World oil demand this year will rise the most since 1988 as economic growth accelerates and consumption surges in China, the International Energy Agency said today. Imports of consumer goods rose 9 percent to a record $31.3 billion, led by televisions and other electronic goods.
Consumer Spending
Consumer spending accelerated in the January-March quarter, growing at a 3.8 percent annual pace, compared with 3.2 percent in the final three months of 2003. Job gains and tax refunds contributed to the increase, which included a March rise in retail sales that was the biggest in a year. Sales of Toyota Motor Corp.'s Lexus luxury cars, which are imported, grew 20 percent in March from a year earlier, led by the RX 330 SUV and ES 300 sport sedan, the company said. Toyota's net income for the fourth quarter, which ended March 31, more than doubled to a record $10.2 billion. Imports of capital goods rose 3.4 percent to $26.9 billion, led by a surge in civilian aircraft. Airbus SAS, the world's largest maker of aircraft, yesterday said it received an order for 15 planes from Spirit Airlines Inc. in the U.S. and options for 50 more in a contract potentially worth $4 billion to the manufacturer, based in Toulouse, France.
Demand for semiconductors has also increased imports. Taiwan Semiconductor Manufacturing Co., the world's largest supplier of made-to-order computer chips, said March sales rose 44 percent from a year ago. The U.S. accounts for almost three- quarters of the company's sales. April sales rose 35 percent to a monthly record, the Hsinchu, Taiwan, company said last week.
China
The trade gap with China widened to $10.4 billion from $8.3 billion. Imports from China rose to $13.8 billion, while exports to China were a record $3.4 billion. A decline in the value of the U.S. dollar has lifted demand at U.S. exporters. Exports of automobiles and parts rose 2.9 percent to a record $7.2 billion. Exports of industrial supplies and materials rose 6.3 percent to a record $16.9 billion. Foreign businesses also bought $27.7 billion worth of capital goods, almost a three-year high. Exports of consumer goods rose 6.8 percent in March to a record $8.6 billion, led by pharmaceuticals.
Dollar Effect
The dollar has lost 7.4 percent of its value in the 12 months that ended March 31 against a trade-weighted index of currencies from the nation's biggest trading partners. The decline made U.S. products cheaper abroad, generating overseas sales at companies such as United Technologies Corp. A report earlier this month from the Institute for Supply Management, the trade organization for purchasing managers, showed more manufacturers were boosting exports in March and April than in any two months since June and July 1988.
United Technologies, the maker of Pratt & Whitney jet engines, Carrier air conditioners and Otis elevators, last week raised its 2004 revenue forecast by $1 billion to $35 billion, the second increase this year. The Hartford, Connecticut-based company gets more than half its sales from outside the U.S. A higher euro and improving global economy are driving results, Chief Executive Officer George David said. Global trade will rise 8.6 percent this year and 10 percent in 2005, the Organization for Economic Cooperation and Development said yesterday, raising its November estimates from 7.8 percent and 9.1 percent. The Paris-based group comprises 30 industrialized nations. ///www.bloomberg.com