Trade Deficit in U.S. Probably Widened on Petroleum Imports

The trade deficit in the U.S. probably widened in November for the first time in five months as oil imports rose, economists said before a report today.

The shortfall grew to $45 billion from $43.5 billion in October, the smallest of the year, according to the median of 75 estimates in a Bloomberg News survey. Consumer sentiment climbed in January to a seven-month high, other figures may show.

Concern that household spending will cool early this year after picking up in the last three months of 2011 means that the gain in imports was probably tempered by a reduction in orders to overseas manufacturers. At the same time, growth in emerging markets may bolster exports, overcoming a slowdown in demand from Europe as the region's debt crisis deepened.

"Imports outpacing exports just ever so much will create a marginal rise in the trade deficit," said Omair Sharif, an economist at RBS Securities Inc. in Stamford, Connecticut. "Consumer goods imports remained fairly weak. Exports are still holding up fairly well despite the ongoing crisis in the euro zone, and that's a pretty encouraging sign."

The Commerce Department will release the trade figures at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from deficits of $41.8 billion to $47.6 billion.

The Thomson Reuters-University of Michigan preliminary index of consumer sentiment in January increased to 71.5 from 69.9 at the end of December, according to the median forecast in the Bloomberg survey before the report at 9:55 a.m. The measure may have been boosted by a pickup in job and wage growth at the end of 2011.

Oil Imports

The value of imported petroleum purchases, which fell to an eight-month low in October, may have rebounded a month later. The cost of the fuel rose 3.6 percent in November from the prior month and was up 33 percent from a year earlier, the Labor Department said Dec. 14.

A slower pace of stockpiling among U.S. companies may have limited America's import bill. Business inventories rose 0.3 in November from a month earlier, compared with a 0.8 percent rise in October, Commerce Department figures showed yesterday. Given tepid wage gains, retailers like American Eagle Outfitters Inc. and Target Corp. offered discounts to attract more buyers in November and December.

Demand for U.S.-made goods in emerging countries may help provide a buffer against any slowdown in Europe's economy stemming from the debt crisis. Exports to South and Central America reached records in October, and the Institute for Supply Management's barometer of factory exports signaled expansion in November after stalling the prior month.

Emerging Markets

"Where we're growing, we're redeploying from more mature economies into emerging markets and we see good growth there across all our markets, Middle East, China, parts of Asia, India, Latin America," Lisa McDermott, chief financial officer at Pall Corp., said at a Jan. 11 investor conference. The Port Washington, New York-based maker of water purification systems reported 27 percent revenue growth at its Asian industrial division in the quarter ended Oct. 31 from a year earlier.

Shipments overseas probably supported economic growth at the end of 2011.

"There is going to a pretty big narrowing in the real trade balance for the fourth quarter, and that's going to contribute a fairly hefty amount to growth," RBS's Sharif said.

The dollar's decline through most of 2011 may have helped boost demand for American-made equipment. From the end of 2010 through a low on July 26, the dollar fell 5 percent against the currencies of U.S. major trade partners tracked by the Federal Reserve. The drop makes American goods cheaper abroad.