US trade gap widens to $36.4bn in November

US trade gap widens to $36.4bn in November
By Alan Rappeport in New York
Copyright The Financial Times Limited 2010
Published: January 12 2010 14:30 | Last updated: January 12 2010 14:30
http://www.ft.com/cms/s/0/aa1e2598-ff7b-11de-8f53-00144feabdc0.html


Greater domestic appetite for industrial supplies and consumer goods widened the US trade gap in November, commerce department figures showed on Tuesday.

The trade deficit grew by 9.6 per cent to $36.4bn, exceeding economists’ expectations. Imports and exports rose to their highest levels in a year as trade volumes picked up pace.

“With most businesses looking to stabilise inventories, demand for imports has picked up substantially,” said Joshua Shapiro, chief US economist at MFR. “At the same time, exports will continue to be boosted by better economic conditions abroad.”

During the last year the US trade gap with the rest of the world has narrowed by 15.74 per cent and has fallen by half from its 2008 peak as global trade stalled. Economists at RDQ Economics note that during the last three months, export volumes have climbed at an annual rate of 36.2 per cent and imports are up at an annual rate of 35.4 per cent.

In November imports climbed by 2.6 per cent to $174.6bn while exports ticked up by 0.9 per cent to $137bn. Higher oil prices added to the import tally, although oil import volumes fell to the lowest level in more than10 years.

Alan Ruskin, a strategist at RBS Securities, said US exports were benefiting from the weaker US dollar and from the fact that other countries are recovering from the recession faster than the US. Some economists expect that US economic output grew by as much as 5 per cent in the fourth quarter.

US businesses exported more cars, parts and food in November. The rebound in manufacturing and consumer demand fuelled higher imports of industrial supplies and consumer goods.

“The real story is the massive recovery in world trade that is a rising tide lifting both sides of the trade accounts,” said John Ryding and Conrad DeQuadros, economists at RDQ Economics. “The collapse in global trade looks to have been the most severe economic impact on global growth and it now appears that a broad-based global recovery in trade is underway.”

The US managed in November to chip away at its politically sensitive trade deficit with China, which fell to $20.7bn from $22.7bn. That improvement comes as trade spats between the two countries over steel taxes have heated up in recent weeks, raising protectionist rhetoric.

The US exported a record $7.3bn in goods and services to China during the month and exports to its biggest trade partner are up by 41 per cent year-on-year. However, the US trade gaps with the European Union, Japan and Mexico all widened in November.