U.S. Trade Gap Widens a Bit; Slump Lifts Exports

[U.S.] Trade Gap Widens a Bit; Slump Lifts Exports
(The New York Times – Reuters)

The United States trade deficit widened slightly in January, as oil prices pushed imports higher, even though slow economic growth reduced the demand for many foreign goods.

The monthly trade gap widened less than 1%, to $58.2 billion, held partly in check by a weak dollar that helped propel exports to a record $148.2 billion, a Commerce Department report released on Tuesday showed.

“While the trade gap widened slightly in January,” a senior economist with Bank of America, Peter Kretzmer, said, “it remained well below its average for fourth quarter 2007.” Net exports could add 0.8% to economic growth this quarter, Mr. Kretzmer said, “helping to offset domestic demand growth that has come to a virtual halt in recent months.”

Exports have risen for 11 consecutive months, making them a source of strength for the American economy, which is suffering from crises in housing and the credit markets.

Paul Ashworth of Capital Economics wrote: “Over all, 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.”

Oil imports totaled $27.1 billion in January, a record, as prices for imported oil increased to an average of $84.09 a barrel. In New York trading on Tuesday, crude oil for April delivery continued to rise, settling at $108.75 a barrel, up from $107.90 late Monday.

The petroleum part of the trade deficit exceeded the non-petroleum share for the first time since October 1992, reflecting both the run-up in oil prices and slackening demand for foreign-made goods like television sets, clothing, appliance and furniture.

Imports of industrial machinery and other capital goods also fell in January.

Imports from China, whose currency trades in a range linked somewhat to the dollar, rose nearly 2% in January, to $26.2 billion. Those from European Union nations fell 4.6%, to $27.3 billion.

United States exports rose 1.6% in January, to a record $148.2 billion, led by industrial and consumer goods and food. But shipments to China fell 15.1%, to $5.9 billion.