WASHINGTON (Feb 7): The US trade deficit widened in December, reversing half of the prior month's sharp contraction, as imports rebounded and exports of goods dropped to a 10-month low amid cooling global demand and declining crude oil prices.
The trade deficit increased 10.5% to US$67.4 billion, the Commerce Department said on Tuesday. The trade gap narrowed 21.1% in November to US$61 billion. The numbers are not adjusted for inflation. The trade deficit widened to a record US$948.1 billion in 2022 from US$845 billion in 2021.
"The data still suggest that domestic and external demand remain subdued," said Andrew Hunter, a US economist at Capital Economics.
Imports increased 1.3% to US$317.6 billion, with goods rising 1.8% to US$258.8 billion. They were boosted by imports of consumer goods, which jumped US$4.1 billion, reflecting increases in cell phones as supply from China improved, and other household goods. Imports of motor vehicles, parts and engines rose US$2.9 billion.
But imports of industrial supplies and materials, which include crude oil, fell US$2.7 billion to US$59.6 billion, the lowest level since October 2021. When adjusted for inflation, imports of industrial supplies were the lowest since May 2021.
Oil prices averaged US$75.24 per barrel in December, the cheapest since January, from US$79.86 in November.
Imports of services fell US$0.3 billion to US$58.8 billion, pulled down by travel and transportation. But charges for the use of intellectual property increased US$0.2 billion.
Exports fell 0.9% to US$250.2 billion. Goods shipments dropped 1.7% to US$168.1 billion, the lowest since in February, mostly reflecting the big decline in crude oil prices.
Exports of industrial supplies and materials dropped US$3.1 billion, with shipments of crude oil falling US$0.8 billion. There were also decreases in exports of other petroleum products.
Inflation adjusted or real exports of petroleum were the highest since February 2020 as were those of motor vehicles, parts and engines. Consumer goods exports fell US$1 billion, but food exports rose US$0.7 billion.
Exports of services increased US$0.7 billion to a record US$82 billion, lifted by travel, transportation as well as other business services. The services surplus was the highest since December 2019.
A smaller trade deficit was one of the contributors to the economy's 2.9% annualized growth pace in the fourth quarter.
"The trade winds have shifted and are no longer blowing as strongly in the direction of positive economic growth," said Christopher Rupkey, chief economist at FWDBONDS in New York. "The economy isn't floundering, but it is unlikely to pick up much speed looking at today's trade deficit data."