The U.S. trade deficit in goods widened in December by USD 5.3 billion, with the deficit coming in at USD 68.3 billion. Consensus expectations were for the deficit to have worsened in the latest month, but shift surpassed the expected widening of USD 2 billion.
The slippage took place on the import side, with foreign purchases rising 2.9 percent. Imports had dropped sharply in the previous three months, and therefore some recovery was to be anticipated, but the advance was above the 1.2 percent expected, said Daiwa Capital Market Research in a report.
Even if imports rose markedly in December, the rise countered only a portion of the fall in the prior three months, and the trend in the past year or so stayed downward. Exports rose 0.3 percent in December after rising 0.8 percent in the prior month.
However, these advances followed sharper falls in the prior two months. Although the trade deficit broadened in December, the average shortfall in the fourth quarter was less than that in the prior quarter, implying a positive contribution to GDP growth. Today’s data do not permit a precise estimate of the contribution because the December data are not price adjusted and they do not include trade in services. However, the net exports might have added as much as 1.5 percentage points to GDP growth, stated Daiwa Capital Market Research.
“The contribution to GDP growth, while positive, will have a weak tone, as it is likely to be driven by a plunge in imports that exceeds soft results for exports”, added Daiwa Capital Market Research.
