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Financial News: U.S. Trade Deficit Widens In December Amid Jump

U.S. Trade Deficit Widens In December Amid Jump In Imports

02/05/2020 - 09:24:00 (RTTNews)

(RTTNews) - With a jump in the value of imports outpacing an increase in the value of exports, the Commerce Department released a report on Wednesday showing the U.S. trade deficit widened in the month of December.

The Commerce Department said the trade deficit widened to $48.9 billion in December from a revised $43.7 billion in November.

Economists had expected the deficit to widen to $48.2 billion from the $43.1 billion originally reported for the previous month.

The wider than expected deficit came as the value of imports surged up by 2.7 percent to $258.5 billion in December after falling by 0.9 percent to $251.8 billion in November.

"The rebound in imports partly reflected the unwinding of disruptions in November to Canadian rail and pipeline shipments," said Paul Ashworth, Chief U.S. Economist at Capital Economics.

Imports of industrial supplies and materials saw substantial growth, with imports of crude oil and non-monetary gold showing notable increases.

Meanwhile, the report said the value of exports climbed by 0.8 percent to $209.6 billion in December after rising by 0.6 percent to $206.8 billion in November.

A significant increase in exports of crude oil was partly offset by a slump in exports of automotive vehicles, parts, and engines.

The Commerce Department also said the goods deficit widened to $69.7 billion in December from $64.6 billion in November, while the services surplus narrowed to $20.8 billion from $21.0 billion.

Ashworth expects net trade to be close to neutral in the first quarter after making a big contribution to GDP growth in the fourth quarter but noted a lot depends on how the situation in China develops.

"If the closure of factories persists for an extended period then that could hit US imports toward the end of the first quarter," Ashworth said.

He added, "There will be some offset, with exports likely to be a little weaker too but, given the still unbalanced state of the US-China bilateral trade relationship, the coronavirus crisis is more likely to result in a narrowing rather than widening of the overall trade deficit."

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