WASHINGTON — The U.S. December trade balance printed a surprisingly low $58.8 billion deficit that some might call a valentine. The favorable December combination of imports falling $2.2 billion and exports advancing $2.2 billion probably will not be sustained ahead.
November’s trade balance was a far larger $63.1 billion deficit and December’s was 6.9% less. The last time there was such a radical improvement in trade was a 9.3% improvement in October 2006, and it was a temporary move in a chronic deficit environment. The U.S. still depends on importing cheap goods and oil. Even so, the December non-oil deficit was $34.8 billion, its best level since November 2003.
December’s 1.1% import drop was centered in autos at down $2.1 billion even as oil and related items posted up $1.3 billion. The volume of imported crude oil fell but the price per barrel was up almost 4% to a record $82.76. Thus, December oil imports remained a record, as was the total for 2007. Imports of consumer and other goods also fell.
As the auto sector recovers and energy consumption continues to gain, the trade deficit might widen again on rising imports.
The 1.5% exports gain centered in civilian aircraft at a $1.4 billion rise, semiconductors at plus-$426 million, and oil- and chemical-related products at up $600 million as rising crude oil prices also raised re-export prices. A weak dollar and Boeing Co.’s strong order book might allow exports to remain robust ahead.
— Market News International