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US Trade Deficit Surges; Import Prices Fall

Friday, 11 Jan 2013 | 8:38 AM ET
Mike Kemp | Getty Images

The U.S. trade deficit unexpectedly grew in November, a drag on economic growth, although the gap's widening was driven by a surge in consumer goods imports, which gives a positive signal for consumer spending.

Also, prices declined for U.S. imports and exports in December, a sign of the chill in the global economy that is hurting exporters but giving respite to U.S. drivers stung by high fuel prices.

The Commerce Department said on Friday the trade gap increased 16 percent in November to $48.7 billion.

Analysts were expecting the deficit to shrink to $41.3 billion, so the report could lead some economists to trim their forecasts for economic growth in the fourth quarter.

Net imports suck cash out of the economy, subtracting from gross domestic product.

The trade deficit was the widest since April, and its expansion was driven by a 3.8 percent increase in imports, the largest gain in eight months.

Imports of consumer goods rose by $4.6 billion, while imports of petroleum products fell by $870 million. That might point to firmer consumer demand, which is the main engine of the U.S. economy.

While the Commerce Department does not release seasonally adjusted data for the U.S. trade deficits with countries and regions, the U.S. goods trade gap with China fell 1.7 percent from October. with a drop in exports outweighing a slighter fall in imports.

Imports surged 4.1 percent from the European Union, and were up 6.4 percent from Germany.

Overall, seasonally adjusted exports rose 1 percent.

The increase was held back by a 1.3 percent decline in exports to the European Union, which continues to battle a sovereign debt crisis that has sent several of its member countries into recession.

Petroleum Drives Down Import Costs

Overall import prices fell 0.1 percent, in line with the expectations of economists polled by Reuters, Labor Department data showed on Friday.

Prices fell 0.1 percent for both fuel and non-fuel imports.

That points to a tame inflation environment that should allow the Federal Reserve to stay on its ultra-easy monetary policy course as it tries to nurse the economy back to health.

At the same time, export prices fell, dragged down by a 0.2 percent drop in prices for non-agricultural exports. Prices fell for exported capital goods and consumers goods.

U.S. manufacturers selling their goods abroad appear to have declining power in pricing as the global economy takes a hit from the European debt crisis.


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