Dec trade gap widens to biggest shortfall in 2 years
Washington
THE US trade deficit increased unexpectedly in December to a two-year high on a pickup in imports of motor vehicles and fewer shipments overseas.
The gap widened 17.1 per cent to US$46.6 billion, the biggest shortfall since November 2012, from a revised US$39.8 billion in November, the Commerce Department reported on Thursday in Washington.
Companies imported a record US$48.8 billion in consumer goods along with more industrial supplies and capital equipment, showing US demand is holding up as global economies cool. Progress towards reducing the trade gap will probably be difficult because of slower demand from overseas markets and a rally in the US dollar.
"The consumer is coming back to life, so that suggests we should import more," Ward McCarthy, chief financial economist at Jefferies LLC in New York, said before the report. "The US is the shining star among global economies. We're generating much faster economic growth, much faster job growth than any other of the major Western countries and I don't think that's going to change anytime soon."
For all of 2014, the trade gap widened 6 per cent to US$505 billion. Last year, the US petroleum deficit, adjusted for changes in prices, was the lowest ever, while the non-oil shortfall was the highest in eight years.
Exports fell 0.8 per cent to US$194.9 billion in December. Shipments of non-monetary gold dropped by US$1.2 billion, while exports of petroleum also declined. Imports increased 2.2 per cent to a record US$241.4 billion in December. Inbound shipments of motor vehicles climbed US$938 million. Imports of industrial materials, including crude oil, also rose.
After eliminating the effects of price fluctuations, which generates the numbers used to calculate gross domestic product, the trade deficit widened to US$54.7 billion in December from US$48.7 billion a month earlier. The trade gap with China, the world's second-biggest economy, widened in 2014 to an all-time high of US$342.6 billion. The US also had a record gap with the European Union. BLOOMBERG
