Global Biz

US Nov trade deficit increases to $36.4b

(Agencies)
Updated: 2010-01-12 23:02

WASHINGTON: The US trade deficit jumped to the highest level in 10 months as an improving US economy pushed up demand for imports. However, exports rose as well, boosted by a weaker dollar, supporting the view that American manufacturers will be helped by a rebounding global economy.

The Commerce Department reported Tuesday that the trade deficit jumped 9.7 percent to US$36.4 billion in November, a bigger imbalance than the US$34.5 billion deficit economists had forecast.

Exports rose 0.9 percent, the seventh consecutive gain, as demand was up for American-made autos, farm products and industrial machinery. Imports, however, rose a much faster 2.6 percent, led by a 7.3 percent rise in petroleum imports.

The deficit with China narrowed by 10.8 percent in November to US$20.2 billion as US exports to China hit an all-time high. Through November, the deficit with China is still the largest the United States incurs with any country but it is down 15.9 percent from the same period in 2008.

Through the first 11 months of 2009, the overall US trade deficit in 2009 was running at an annual rate of $371.59 billion, down by nearly half from last year's imbalance of US$695.94 billion. That improvement reflected a deep recession in the United States which cut sharply into consumer demand for foreign products.

But as the US economy has begun to mount a recovery from the worst downturn since the Great Depression, imports have started to rise. Economists expect that development will continue in 2010 and they are predicting a higher trade deficit as a result.

However, they also contend that the fortunes of American manufacturers will be lifted by a continued rise in demand for US exports as America's major overseas markets mount a recovery as well. The fall in the dollar against most major currencies since the US currency hit a 2009 high last March is also expected to boost export sales.

Economists are looking for strong gains in exports to help manufacturers and the overall economy in 2010.

For November, the 0.9 percent rise in exports pushed them to $138.24 billion, the highest level for exports in a year.

Shipments of farm products were up $1.28 billion led by a big gain in sales of soybeans. Exports of capital products including semiconductors, industrial machinery and computers rose by $360 million while sales of US-made autos and auto parts rose by $714 million.

The 2.6 percent rise in imports of goods and services pushed them to US$174.64 billion, the highest level since December 2008. The increase was led by a 7.3 percent increase in petroleum imports which rose to US$24.43 billion.The volume of crude oil imports fell to the lowest level since February 1999 but the price rose to an average of US$72.54 per barrel, the highest level since October 2008.

Imports of computers, telecommunications equipment and industrial machinery were all up but imports of autos and auto parts fell by $54 million.

The expectation is that while imports will be rising in coming months, the gains in exports will continue as well, reflecting a rebounding global economy and the weaker dollar.

The global rebound is being led by China and other Asian nations. Heavy equipment maker Caterpillar Inc. is predicting that its sales will rise in 2010, reflecting in part greater demand from China and other Asian markets.

For November, the US deficit with Canada dropped 32.1 percent to $1.4 billion while the imbalance with Mexico rose by 12.8 percent to $5.1 billion. The deficit with the European Union was up 30.5 percent to $6.4 billion and the deficit with Japan rose by 22.8 percent to $5.4 billion.