The US trade deficit was recorded widening in December at its highest level since 2012 as a stronger dollar seemed sucking in all the imports, while weighing on exports, seeing the economic growth estimate in the fourth-quarter revised lower.
The Commerce Department report on Thursday showed that the trade deficit increased 17.1 percent to USD 46.6 billion, reporting the largest level since November 2012. The December’s figure was also the biggest percentage surge since July 2009.
The trade deficit widened to USD 54.7 billion from November’s USD 48.7 billion when adjusted for inflation.
Several economists had made forecast of the trade deficit dropping to USD 38 billion.
The surprise surge in the trade deficit in December last year indicated a downward revision to the gross domestic product estimate of the country in the fourth-quarter.
Last week, the US government reported the expansion of GDP at an annual rate of 2.6 percent with the trade estimated to have subtracted 1.02 percentage point from growth.
Economist Gennadiy Goldberg, from New York-based TD Securities, said, “This brings considerable downside risks to GDP revisions, likely shaving 0.3 percentage point.”
Even though the country’s trade is on the back foot, the firming labor market along with lower gasoline prices is encouraging the consumer spending, which is likely to drive growth in early this year.
The imports increased 2.2 percent to USD 241.4 billion in the month of December, signaling towards consumer-driven strengthening domestic demand. The non-petroleum products imports jumped to a record high, reflecting strengthening of the US dollar.
But the exports declined 0.8 percent to USD 194.9 billion, an eight-month low, in December.
Exports hugely suffered due to a strengthening dollar, the slowing growth in Europe and Asia, and the US West Coast ports a labor dispute that resulted in delays in the movement of goods.
The exports to Mexico and Canada, the major trading partners of the United States, dropped in December.
On the other hand, the US exports to the European Union, Japan and politically sensitive China surged in December.
The US-China trade deficit dropped 5.5 percent to USD 28.3 billion.
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