The US trade deficit widened slightly in January, as oil prices averaging $84 per barrel pushed imports to an all-time high even though slow US economic growth reduced demand for many foreign goods.
The monthly trade gap widened less than 1 percent to $58.2 billion, held partly in check by a weak US dollar that helped propel exports to a record $148.2 billion, according to a Commerce Department report on Tuesday. "While the trade gap widened slightly in January, it remained well below its average for fourth quarter 2007," said Peter Kretzmer, a senior economist with Bank of America.
Net exports could add 0.8 percentage point to US economic growth this quarter, "helping to offset domestic demand growth that has come to a virtual halt in recent months," Kretzmer said. Exports have risen for 11 consecutive months, making them a source of strength for the US economy, otherwise still reeling from a crisis in housing and credit markets.
"Overall, the dollar's decline and the domestic recession are having the predictable effects on the trade deficit. Unfortunately, much of that improvement is being offset by soaring energy prices," Paul Ashworth, an economist at Capital Economics Ltd, wrote in a research note.
US financial markets paid little attention to the trade data, focusing instead on a co-ordinated move by the Federal Reserve and other central banks to pump hundreds of billions in fresh funds to cash-starved credit markets. The US oil import bill hit a record $27.1 billion in January, as average prices for imported oil also rose for an 11th consecutive month to a record $84.09 per barrel.
That was a 61 percent increase from January 2007 average price of $52.23 per barrel. In trading on Tuesday, US crude oil futures hit a record $109.72 before retreating slightly. The petroleum portion of the trade gap exceeded the non-petroleum share for the first time since October 1992, reflecting both the run-up in oil prices and slackening US demand for foreign-made goods such as TVs, clothing, appliance and furniture as the economy slows.
Imports of industrial machinery and other capital goods also fell in January. Imports from China, which maintains a tightly managed foreign exchange rate, rose nearly 2 percent in January to $26.2 billion. But from the European Union, imports declined 4.6 percent to $27.3 billion. The euro has risen sharply in value as the dollar has declined, making European exports more expensive.
US exports rose 1.6 percent in January to a record $148.2 billion, led by all-time highs for US industrial and consumer goods, as well as food. However, US shipments to China fell 15.1 percent in January to $5.9 billion. The drop in exports and rise in imports from that country pushed the closely watched trade gap with China to $20.3 billion, up 8 percent.