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Economy in Brief

U.S. Trade Deficit Hits 12-Month High
by Tom Moeller February 10, 2010

Higher oil prices and economic recovery were December's double-punch to the U.S. trade accounts. Together, they raised imports and increased the international trade deficit to $40.2B which was the highest level in twelve months. The rise was from November's unrevised deficit of $36.4B. The latest figure was quite a bit higher than Consensus expectations for a deficit of $35.5B.

Imports rose 4.8% in part due to a rise in crude oil prices to $73.20 per barrel which was the highest price since October of 2008. In addition the quantity of crude oil imports jumped 14.3% (-17.5% y/y) to the highest level since March. U.S. economic recovery also was evident in a 3.3% increase (3.0% y/y) in real nonoil imports which was the fifth increase in six months. Real non-auto capital goods imports jumped 4.6% (2.5% y/y) after a 3.9% November increase. Real automotive vehicles & parts imports also were strong with a 9.6% increase (18.9% y/y) and have nearly doubled since May. Real nonauto consumer goods imports were unchanged (3.4% y/y) following earlier strength since June. Finally, services imports jumped 1.1% (-1.5% y/y) and have risen a firm 6.5% since March. U.S. travels abroad rose 1.8% (-5.4% y/y recouping the  November decline while passenger fares jumped 2.9% (-20.5% y/y).

Again reflecting the competitive value of the dollar, nominal exports jumped 3.3% m/m and by 17.3% from the April low. More impressive was the 4.4% monthly increase in real merchandise exports which are up 18.7% from their low. Real capital goods exports jumped 5.2% in December (0.6% y/y) and have risen 14.9% from their low. Real exports of non-auto consumer goods also posted a firm 2.1% gain and have risen 16.2% from the January low. Real automotive exports surged 10.2% in December and by 17.4% during the last twelve months. Exports of services slipped 0.1% (-0.3% y/y). 

By country, the trade deficit with mainland China lessened to $18.1B, its least since April. The deficit has narrowed from its peak of $27.9B in October of 2008. Exports to China rose nearly two-thirds y/y while imports rose just 5.7%. With Japan, the trade deficit improved modestly to $4.6B from $5.3B one year earlier as exports rose 9.7% and imports fell 2.7%. With the European Union, the trade deficit was stable m/m at  $6.4B as exports declined 3.7% y/y and imports fell 4.5%.  

The international trade data can be found in Haver's USECON database. Detailed figures are available in the USINT database.

Is the International Role of the Dollar Changing? from the Federal Reserve Bank of New York can be found here.

Foreign Trade  December November October Y/Y 2009 2008 2007
U.S. Trade Deficit $40.2B $36.4B $33.2B $41.9B (12/08) $380.7B $695.9B $701.4B
 Exports - Goods & Services 3.3% 0.9% 2.7% 7.4% -15.0% 11.2% 13.2%
 Imports - Goods & Services 4.8 2.6 0.7 4.6 -23.3 7.6 6.0
  Petroleum 14.8 0.3 -10.6 24.5 -44.1 37.0 9.4
  Nonpetroleum Goods 3.8 2.3 3.2 2.6 -21.0 1.5 4.8

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