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Montevideo, July 16th 2019 - 14:16 UTC

 

 

US trade deficit widens sharply in December: imports increase, exports drop

Thursday, February 28th 2019 - 09:15 UTC
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The goods trade deficit jumped 12.8% to US$79.5 billion in December, boosted also by an increase in imports The goods trade deficit jumped 12.8% to US$79.5 billion in December, boosted also by an increase in imports

The US trade deficit widened sharply in December as slowing global demand and a strong dollar weighed on exports, another sign that economic growth slowed in the fourth quarter. Other data from the Commerce Department on Wednesday showed new orders for US-made goods barely rose in December and business spending on equipment was much weaker than previously thought, pointing to a softening in manufacturing activity.

The reports, which added to weak December data on retail sales and housing starts, could prompt economists to cut fourth-quarter GDP estimates. But some of the drag on growth from the goods trade gap and weak business spending on equipment could be offset by a strong increase in inventories in December.

The goods trade deficit jumped 12.8% to US$79.5 billion in December, boosted also by an increase in imports. Exports fell 2.8% amid steep declines in shipments of foods, industrial supplies and capital goods.

Imports increased 2.4% driven by food and capital and consumer goods.

Retail inventories increased 0.9% in December after falling 0.4% in the prior month. Retail inventories, excluding motor vehicles and parts, the component that goes into the calculation of GDP, rebounded 1% in

December after dropping 0.9% in November.

Growth estimates for the fourth quarter are currently around a 2% annualized rate. The government will publish the fourth-quarter GDP report on Thursday. The economy grew at a 3.4% pace in the third quarter.

In another report on Wednesday, the Commerce Department said factory goods orders edged up 0.1% in December amid declining demand for machinery and electrical equipment, appliances and components.

Data for November was revised slightly up to show factory orders falling 0.5% instead of the previously reported 0.6% drop.

Manufacturing, which accounts for about 12% of the economy, is slowing as some of the boost to capital spending from last year's US$1.5 trillion tax cut package fades. 

In addition, the strong dollar and cooling growth in Europe and China are hurting exports. Lower oil prices are also slowing purchases of equipment for oil and gas well drilling.

In December, orders for machinery dropped 1% after tumbling 2% in November. Orders for mining, oil field and gas field machinery plunged 5.2% after rising 1.9% in November. 

There were also decreases in orders for industrial machinery as well as turbines, generators and other power transmission equipment in December.

Orders for transportation equipment rose 3.2% in December after increasing 3.1% in the prior month. Orders for civilian aircraft and parts jumped 28.4% in December. Motor vehicles and parts orders rose 2.4%.

The Commerce Department also said December orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, fell 1% instead of the 0.7% drop reported last week.

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