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February 11, 2010

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Home » Business » Economy

US trade gap sits at US$40.2b

THE United States trade deficit surged to a larger-than-expected US$40.18 billion in December, the biggest imbalance in 12 months. The wider deficit reflected a rebounding economy that is pushing up demand for imports.

The US Commerce Department yesterday said the December deficit was 10.4 percent higher than the November imbalance. It was much larger than the US$36 billion deficit that economists had expected.

For December, exports of goods and services rose for an eighth consecutive month, climbing 3.3 percent to US$142.70 billion, reflecting strong gains in sales of commercial aircraft, industrial machinery and US-made autos and auto parts.

Imports rose 4.8 percent in December to US$182.88 billion, led by a 14.8 percent surge in oil imports which rose to the highest level since October 2008.

For all of 2009, the deficit totaled US$380.66 billion, the smallest imbalance in eight years, as a deep recession cut into imports. However, economists believe the deficit will rise in 2010 as US demand for imports outpaces US export sales.

The December deficit was the largest since the imbalance totaled US$41.86 billion in December 2008. The deficit, which hit a nine-year low of US$25.81 billion in May, has been rising in recent months as the US economy has been pulling out of the deepest recession since the 1930s and demand for imports rebounds.

The deficit is expected to keep rising in 2010 even though US manufacturers will be benefiting from stronger overseas sales as the global economy rebounds and a weaker dollar makes their products competitive in foreign markets. The export gains are expected to be outpaced by an even larger rebound in imports.

The US trade deficit with China fell in December to US$18.1 billion and totaled US$226.8 billion for the year, down from a record US$268 billion in 2008.

US exports to China in December increased to a record high of US$8.4 billion.


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