By Joshua Newell
WASHINGTON (MNI) – An upsurge in oil prices is expected to grow the
trade deficit for March, even as exports also rise.
The trade deficit is expected at $47.7 billion, as projected from a
survey of economists by Market News International. This is up from a
$45.8 billion deficit in February.
According to James O’Sullivan, the chief economist for MF Global,
both imports and exports should rise for March; however, the deficit
will still rise in nominal terms because of “a big jump in oil prices
leading to a big jump in oil imports.”
Regarding exports, he continued by saying that “last month exports
were surprisingly weak, so expect a bounceback of exports this month.”
Even as many emerging countries strive to cool down their
economies, their demand for U.S. goods remains high, according to
O’Sullivan, as does European demand.
Because of this continued demand, U.S. retail sales grew at a
decent pace in March. Furthermore, the March ISM reports for
manufacturing and non-manufacturing stayed positive, as both imports and
exports rose across the board.
Still, this rise in exports will be more than offset by a spike in
import growth, driven by the rapid hike in oil prices. Imports of oil
alone should grow by several billion dollars.
This would mark the fourth month in a row where the trade deficit
has been over $40 billion.
The trade balance report will be released Wednesday at 8:30 ET by
the Department of Commerce.
— Joshua Newell is a reporter for Need to Know News.
** Market News International Washington Bureau: 202-371-2121 **
[TOPICS: MAUDS$,M$U$$$]
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