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January 13, 2010

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Home » Business » Economy

Imports widen US trade deficit

THE United States trade deficit jumped to its highest level in 10 months as an improving US economy pushed up demand for imports.

However, exports rose as well, boosted by a weaker dollar, supporting the view that American manufacturers will be helped by a rebounding global economy.

The US Commerce Department reported yesterday that the trade deficit jumped 9.7 percent to US$36.4 billion in November, a bigger imbalance than the US$34.5 billion deficit economists had forecast.

Exports rose 0.9 percent, the seventh consecutive gain, as demand was up for American-made vehicles, farm products and industrial machinery. Imports, however, rose a much faster 2.6 percent, led by a 7.3-percent rise in petroleum imports.

The deficit with China narrowed by 10.8 percent in November to US$20.2 billion as exports to China hit an all-time high. Through November, the deficit with China is still the largest the US incurs with any other country but it is down 15.9 percent from the same period in 2008.

Through the first 11 months of 2009, the overall US trade deficit in 2009 was running at an annual rate of US$371.59 billion, down by nearly half from last year's imbalance of US$695.94 billion. That improvement reflected a deep recession in the US which cut sharply into consumer demand for foreign products.

But as the US economy has begun to mount a recovery from the downturn, imports have started to rise. Economists expect that development will continue and they are predicting a higher trade deficit as a result.

However, they also contend that the fortunes of American manufacturers will be lifted by a continued rise in demand for US exports as America's major overseas markets mount a recovery as well. The fall in the dollar against most major currencies since it hit a 2009 high in March is also expected to boost exports.


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