Higher oil prices led to a reversal and worsening in the trade gap in December. However, exports posted a solid gain for the month and excluding oil, the deficit actually narrowed notably. The overall U.S. trade deficit in December grew to $40.6 billion from an unrevised $38.3 billion deficit the prior month. The December shortfall essentially matched the median forecast for a $40.5 billion gap. Exports rose 1.8 percent, following a 1.0 percent gain in November. Imports jumped 2.6 percent after increasing 0.8 percent the month before.
The widening of the trade deficit was primarily in the petroleum gap which expanded to $25.3 billion from $20.1 billion in November. The nonpetroleum goods differential shrank to $27.2 billion from $30.4 billion the month before.
By end-use categories, the increase in goods exports was led by a $1.5 billion boost in capital goods with industrial supplies gaining $1.1 billion. Especially notable for capital goods was that only $0.2 billion was for civilian aircraft. Also rising were autos, up $0.6 billion. Declines were seen in consumer goods, down $0.3 billion, and in feeds & beverages, down negligibly.
The jump in goods imports was led by a $5.2 billion surge in industrial supplies-largely oil imports. Foods, feeds & beverages and auto imports rose modestly. Imports of consumer goods slipped $0.4 billion.
On a not seasonally adjusted basis, the December figures show surpluses, in billions of dollars, with Hong Kong $2.2 ($1.9 for November), Singapore $1.3 ($0.5), Australia $1.2 ($1.2), and Egypt $0.7 ($0.4). Deficits were recorded, in billions of dollars, with China $20.7 ($25.6), OPEC $8.3 ($7.0), European Union $6.6 ($7.1), Japan $5.9 ($5.8), Mexico $4.7 ($5.6), Canada $3.9 ($1.7), Germany $3.3 ($3.1), Ireland $2.6 ($2.3), Nigeria $2.5 ($1.7), Venezuela $2.0 ($1.6), Korea $0.7 ($1.6), and Taiwan $0.6 ($0.8).
While the larger overall trade gap is not good for overall economic growth, at least the boost in exports is a positive for U.S. manufacturers. There was little initial reaction in the markets to the report.