WASHINGTON – The U.S. trade deficit widened in January, reflecting a big jump in oil imports and a drop in exports.
The Commerce Department said Thursday that the deficit rose to $44.4 billion, an increase of 16.5 per cent from December. U.S. exports dropped 1.2 per cent to $184.5 billion, reflecting declines in sales to Europe, China, Japan and Brazil. Imports rose 1.8 per cent to $228.9 billion as oil imports surged 12.3 per cent.
Even with the wider deficit in January, economists say they think the deficit this year will narrow slightly, in part because of continued gains in U.S. energy exports. A narrower trade gap boosts growth because it means U.S. companies are earning more from overseas sales while U.S. consumers and businesses are spending less on foreign products.
The deficit for all of 2012 was revised down slightly to $539.5 billion, a drop of 3.6 per cent from 2011. The January deficit was running at an annual rate of $533.4 billion.
U.S. exports had jumped to a near-record high in December, a surge that helped the economy grow slightly in the fourth quarter. The economy as measured by the gross domestic product grew at an annual rate of 0.1 per cent in the October-December quarter, an upward revision from an initial estimate that it had shrunk at the same rate.
The December trade report had not been available when GDP for October-December was first reported.
Economists see the trade picture brightening further in 2013, helped in part by an energy production boom in the United States and by stronger growth in some major export markets. That forecast is also based on an assumption that the European debt crisis will continue to stabilize, helping boost exports to that region and that growth in Asia will rebound.
For January, however, exports showed widespread declines. U.S. exports to the European Union dropped by 6.4 per cent and were also down in China, Brazil and Japan
The politically sensitive trade deficit with China rose in January to $27.8 billion, up 13.6 per cent from December. For all of 2012, the deficit with China increased to $315.1 billion, the largest imbalance ever recorded with a single country.
That could add pressure on the Obama administration to take a harder line on China’s trade practices. Some U.S. manufacturers contend that China keeps the value of its currency artificially low to make its exports to the U.S. cheaper.
Production of oil and natural gas has been rising in the United States because drillers have learned to tap once-inaccessible reserved trapped in shale formations. New techniques such as horizontal drilling and hydraulic fracturing, or fracking, have made this possible.
Increased production has lowered U.S. prices of crude oil and natural gas, which refiners use to make gasoline, diesel and other fuels. Crude in the U.S. has been selling for $20 per barrel cheaper than international crude. With lower input costs, U.S. refiners are making enormous amounts of petroleum-based fuels and selling them on the international market at a huge profit.