The US trade deficit probably climbed in August on higher crude oil costs at the same time slower global growth reduced demand for US exports, economists said before a report last week.
The gap widened to US$44 billion during the month from US$42 billion in July, according to the median forecast of 62 economists in a Bloomberg survey before the Commerce Department’s report on Thursday.
More expensive oil pushed up producer prices last month, figures from the US Labor Department may show on Friday.
A stagnant Europe and slower growth in China and other emerging markets may be starting to curtail demand for US products, a source of strength for the expansion in the second quarter. At the same time, the pickup in the cost of energy may push up the nation’s import bill and costs for US companies.
“The global slowdown has reduced export growth, hobbling one of the two key drivers of the recovery thus far,” said Nigel Gault, chief US economist at IHS Global Insight in Lexington, Massachusetts. “The other key driver, business fixed investment, is also weakening.”
Six of the top 10 export markets for US manufactured goods, including China, Japan and the UK, showed shrinking business activity last month, according to purchasing managers surveyed by HSBC Holdings PLC and Markit Economics. Canada and Mexico, the two largest markets for US goods, posted slower growth than in the prior month.
“The US itself is doing OK, not great, but we’re not looking at a recession,” said Michael Gapen, a senior economist at Barclays PLC in New York. “Europe is in a minor recession and China is slowing. Exports are a challenge.”
Price increases for fuel from overseas probably pushed up the value of imports in August. The active contract on Brent oil on the ICE Futures Europe exchange climbed to US$114.57 at the end of August, from US$104.92 on July 31.
Higher fuel costs led to gains in the producer price index and a gauge of import prices, Labor Department reports may show. Wholesale costs climbed 0.8 percent last month after a 1.7 percent surge, according to the median forecast in a Bloomberg survey.
Import prices increased 0.8 percent after a 0.7 percent rise, the survey median showed before the agency’s report on Thursday.
The slackening world economy is weighing on sales at companies such as Caterpillar Inc.
Caterpillar, the world’s biggest construction and mining equipment maker, cut its forecast for 2015 earnings after commodity producers reduced capital expenditure. The company said profit will be US$12 to US$18 a share, compared with previous forcasts of US$15 to US$20.
Peoria, Illinois-based Caterpillar is forecasting moderate and “anemic” growth through 2015, chairman and chief executive officer Doug Oberhelman said on Sept. 24 in a presentation to analysts at a conference in Las Vegas. Construction in emerging markets will probably show modest improvements, he said.
“We’ve seen a slowing in economic growth that was more than we expected,” he said. “We think 2013 could look like this year in terms of worldwide economic growth.”
Another report on Friday may show consumer sentiment this month held close to a four-month high.
The Thomson Reuters/University of Michigan preliminary sentiment index eased to 78 this month from 78.3, according to the median forecast in a Bloomberg survey of economists.