US trade deficit widens as ex­ports hit low

The Pak Banker - - COMPANIES/BOSS -

The US trade deficit widened more than ex­pected in Jan­uary as a strong dol­lar and weak global de­mand helped to push ex­ports to a more than five-and-a-half-year low, sug­gest­ing trade will con­tinue to weigh on eco­nomic growth in the first quar­ter.

The Com­merce Depart­ment said on Fri­day the trade gap in­creased 2.2 per­cent to $45.7 bil­lion. De­cem­ber's trade deficit was re­vised up to $44.7 bil­lion from the pre­vi­ously re­ported $43.4 bil­lion. Ex­ports have de­clined for four straight months.

Econ­o­mists polled by Reuters had fore­cast the trade deficit widen­ing to $44.0 bil­lion in Jan­uary. When ad­justed for in­fla­tion, the deficit in­creased to $61.97 bil­lion from $60.09 bil­lion in De­cem­ber.

Trade sub­tracted a quar­ter of a per­cent­age point from gross do­mes­tic prod­uct in the fourth quar­ter, help­ing to hold down growth to a tepid 1.0 per­cent an­nual rate. In Jan­uary, ex­ports of goods fell 3.3 per­cent to $116.9 bil­lion, the low­est level since Novem­ber 2010. Over­all ex­ports of goods and ser­vices dropped 2.1 per­cent to their low­est level since June 2011.

There were de­clines in food ex­ports, which were the weak­est since Septem­ber 2010. In­dus­trial sup­plies and ma­te­ri­als ex­ports fell to their low­est level since March 2010. Pe­tro­leum ex­ports also fell, touch­ing their low­est level since Septem­ber 2010.

Ex­ports of non-pe­tro­leum prod­ucts were the weak­est since Fe­bru­ary 2011. Ex­ports to the United States' main trad­ing part­ners fell broadly in Jan­uary.

Im­ports of goods fell 1.6 per­cent to $180.6 bil­lion, the low­est level since Fe­bru­ary 2011. Im­port growth is be­ing con­strained by on­go­ing ef­forts by busi­nesses to re­duce a stock­pile of un­sold mer­chan­dise.

Lower oil prices as well as in­creased do­mes­tic en­ergy pro­duc­tion are also help­ing to curb the im­port bill. There were de­clines in im­ports of in­dus­trial sup­plies and ma­te­ri­als. Au­to­mo­bile im­ports were, how­ever, the high­est on record. The po­lit­i­cally sen­si­tive U.S.China trade deficit rose 3.7 per­cent to $28.9 bil­lion in Jan­uary.

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