Rise in US trade deficit bigger than expected in December


THE US trade deficit increased more than expected in December on rising imports and higher oil prices, lifting the 2011 gap figure to the highest level since the financial crisis. Separately, consumer sentiment fell in early February as concerns over falling incomes outweighed optimism over jobs.

Commerce department figures released yesterday showed the trade gap grew 2.7 per cent to $48.8 billion, the highest level since June, from a revised $47.1 billion in November. Economists surveyed by Bloomberg had expected the deficit to rise to $48.5 billion in the final month of the year.

December’s increase lifted the full-year trade gap by 11.6 per cent to $558 billion, the highest level in three years, with imports and exports both hitting record levels.

Imports were up 13.8 per cent to $2.7trillion, as purchases of foreign cars surged. Oil prices reached record highs last year, also lifting the cost of imported fuel. Exports grew 14.5 per cent to $2.1 trillion. President Barack Obama has set a goal of doubling exports by 2015.

The trade gap with China rose to a record $295.5 billion in 2011 as record imports outpaced export growth. The data came before a visit by Xi Jinping, the Chinese vice-president and presumptive next president, to Washington next week, which observers will be closely watching for indications of China’s future relationship with the west.

In December, exports rose for the first time in three months, up 0.7 per cent to $178.8 billion, led by industrial supplies and materials, cars and food and beverages. Imports increased at almost twice that rate, rising 1.3 per cent to $227.6 billion, as the US bought more capital goods, consumer products, cars and industrial supplies and materials abroad.

The gap with China narrowed slightly over the month, falling to $23.1 billion, as imports fell faster than exports. Earlier yesterday, China reported that its exports declined for the first time since 2009 and that imports plunged 15.3 per cent. Exports to the European Union rebounded 3.6 per cent from November’s decline.

A survey of US consumers showed sentiment fell more than forecast at the beginning of this month. The Thomson Reuters/ University of Michigan consumer sentiment index fell to 72.5 from 75 in January, which was an 11-month high. The median estimate of economists was 74.8.

The measure of current economic conditions pulled back to 79.6 from 84.2, while future expectations declined to 68 from 69.1.

Fewer people reported an improving financial situation, with a quarter of households saying their income had fallen. – Copyright The Financial Times Limited 2012