MercoPress. South Atlantic News Agency

Record budget deficit but US business confident

United States November budget deficit was larger than forecasted because of a significant increase in outlays according to the US Treasury Department.

However business and consumers are optimistic about 2006.

November 2005 shortfall was 83.06 billion US dollars compared to 57.9 billion a year ago, becoming a record month. Analysts were forecasting 76 billion US dollars.

The accumulated fiscal 2006 budget deficit reached 130.3 billion which represents an increase over the 115.2 billion of the first two months of fiscal 2005 (October/November).

Outlays in November 2005 totalled 221.9 billion US dollars compared to the 138.8 billion of a year ago, while revenue was 138.4 billion against 134.5 billion November 2004.

But in spite of the budget deficit the US economy is expected to have a sustained expansion next year, according to a poll among manufacturers.

"Manufacturing officials, buyers and suppliers are optimistic about economic expansion in the first half of 2006 and forecast additional growth during the second half although at a slower rate", said Norbert Ore pollster for the manufacturing Institute of Suppliers and Management.

The manufacturing industry is expected to manage a 5,4% expansion in 2006 but the services sector is forecasted to grow even faster 6,6%.

In manufacturing employment is estimated to grow by 1.3% and labour costs an average 2.7%, with input costs increasing 3,5% during the first four months of 2006.

The services sector forecast employment to increase 2.3% and the prices index 4%.

Consumers apparently are also in an optimistic mood. December's Confidence Index from Investors Business Daily reported that for the third month running the index has been increasing pushed by falling fuel prices and a strong labour market.

"December's index signals 51,1, up from 48,6 in November and the first over 50 since last August", said analyst Terry Jones.

The 50 points plus index is the benchmark for optimism according to the system used by Investors Business Daily.