The US trade deficit widened unexpectedly in December to $40.2 billion, fueled by the highest oil prices since October 2008, the Commerce Department said today.
Wall Street analysts surveyed before the report had expected the trade deficit to narrow to $36 billion from $36.4 billion in November.
The 10.4 per cent jump in the trade gap came as both US exports and imports showed healthy gains for the month.
Exports rose 3.3 per cent to $142.7 billion, the biggest percentage increase since March 2007. But that was outpaced by a 4.8 per cent rise in imports to $182.9 billion.
The import gain suggested consumer demand was picking up, but economists said that with so much demand sated by overseas producers, the U.S. economy likely grew a bit more slowly in the fourth quarter than the 5.7 per cent annualised gain previously estimated.
US stocks index futures remained flat after the data, while Treasury debt prices held gains and the dollar extended losses versus the yen.
The average price for imported oil rose to $73.20 per barrel in December, which along with increased volume sent the monthly U.S. petroleum import bill to $28.1 billion. Both were the highest since October 2008.
For the year, the US trade deficit totaled $380.7 billion, down sharply from $695.9 billion in 2008, after a year in which the global financial crisis took a heavy toll on trade.
The politically sensitive US trade deficit with China fell in December to $18.1 billion and totaled $226.8 billion for the year, down from a record $268.0 billion in 2008.
US exports to China in December were a record large $8.4 billion.
The trade gap with China is by far the largest the United States has with any country and symbolizes what many US politicians believe are China's unfair trade practices.
Much of that concern is focused on China's exchange rate for its currency, the renminbi, which Beijing has held constant at about 6.83 yuan per dollar since July 2008.
Western experts say China's currency is undervalued by 25 per cent to 40 per cent, effectively subsidising China's exports and taxing its imports at the expense of other countries.
Last week, president Barack Obama told senators the United States needed to get tough on countries such as China that undervalue their currencies.
Meanwhile, a separate report showed US mortgage applications dipped last week, reflecting reduced demand for home purchase loans even as rates on 30-year loans fell to their lowest since December.
A continuation of lackluster demand for home purchase loans would not bode well for the US housing market, which remains highly vulnerable to setbacks and heavily reliant on government intervention.
Reuters