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Economy in Brief

U.S. Trade Deficit Deepens Further Due To Higher Oil Prices
by Tom Moeller  March 10, 2011

The U.S. foreign trade deficit deepened during January to $46.3B versus a little-revised $40.3B in December. Consensus expectations had been for $41.5B. Economic improvement abroad and the lower value of the dollar helped exports jump 2.7% (15.9% y/y) following a 1.9% December increase. Imports rose 5.2% (12.8% y/y) with higher oil prices, the largest monthly increase since March 1993. In chained 2005 dollars, the overall deficit in goods deteriorated to $49.5B from $46.0B in December.

The primary factor causing last month's deficit deterioration was higher oil imports. The 10.1% m/m increase reflected a rise in the average price for a barrel of crude oil to $84.34 from $79.78 in December. Twelve months earlier prices averaged $73.89. The total value of crude petroleum imports rose more-than one third as the quantity also jumped 18.5% with the firmer economy.

Overall imports rose 5.2% (19.3% y/y). Goods imports rose 6.0% (22.1% y/y) but when adjusted for higher prices imports rose a lesser 4.1% (16.5% y/y). Nominal imports of foods, feeds & beverages increased 6.1% (17.3% y/y) though when adjusted for higher prices the y/y gain was only 2.7%. Nonauto capital goods imports jumped 5.3% and nearly all of the 24.3% y/y increase reflected higher volume. Nonauto consumer goods imports rose 2.2% (13.8% y/y) and all of the annual increase was real. Auto imports rose 14.0% (29.9% y/y) and, again, it was all volume.

Total exports rose 2.7% (15.9% y/y) after a firm 1.9% December increase. The 3.3% rise (19.8% y/y) in goods exports reflected a 10.2% increase (36.6% y/y) in industrial materials, a 13.4% gain (22.2% y/y) in auto exports and a 0.7% increase (17.5% y/y) in foods, feeds & beverages. Capital goods exports fell 1.0% in January (+12.6% y/y) and nonauto consumer goods fell 3.8% (+3.2% y/y).

Services exports rose 1.0% in January (6.9% y/y). As more foreign citizens visited the U.S., travel exports rose 1.3% (8.4% y/y) and passenger fares jumped 4.0% (20.1% y/y). Imports of services rebounded 1.2% (6.6% y/y). Travel imports rose 0.7% (0.8% y/y) and passenger fares rose 3.6% (12.5% y/y).

By country, the goods trade deficit with China deteriorated to $23.3B as exports rose 17.3% y/y and imports rose by one-quarter. (Imports are roughly four times the level of U.S. exports.) The trade deficit with Japan also deteriorated to $5.0B as exports rose a reduced 3.3% and imports fell 12.2% (21.9% y/y). (Imports from Japan are roughly twice the level of U.S. exports.) The trade deficit with the European Union eased to $5.6B as U.S. exports grew 8.6% y/y and imports fell 10.2% (20.6% y/y). (Imports from Europe are roughly one-third larger than U.S. exports.)

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

Foreign Trade Jan Dec Nov Y/Y 2010 2009 2008
U.S. Trade Deficit $46.3B $40.3B $38.2B $34.6B
$495.7B $374.9B $698.8B
Exports-Goods & Services(M/M) 2.7% 1.9% 1.0% 15.9% 16.8% -14.6% 11.5%
Imports-Goods & Services 5.2 2.6 0.8 19.3 19.7 -23.3 8.0
 Petroleum 10.1 16.8 6.9 31.7 32.4 -44.0 37.0
 Nonpetroleum 5.0 0.3 0.0 19.9 20.7 -20.9 1.5
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