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LATEST US DATA: Record oil prices swell trade deficit

November’s gap jumps by 9.3% to US$63.1b; highest level in 14 months

(WASHINGTON) The US trade deficit in November surged to the highest level in 14 months, reflecting record imports of foreign oil. The deficit with China declined slightly while the weak dollar boosted exports to another record high.

The Commerce Department reported that the trade deficit, the gap between imports and exports, jumped by 9.3 per cent, to US$63.1 billion.

The imbalance was much larger than the US$60 billion that had been expected.

The increase was driven by a 16.3 per cent surge in America’s foreign oil bill, which climbed to an all-time high of US$34.4 billion as the per barrel price of imported crude reached new records. With oil prices last week touching US$100 per barrel, analysts are forecasting higher oil bills in future months.

The big surge in oil pushed total imports of goods and services up by 3 per cent to a record US$205.4 billion.

Exports also set another record, rising by a smaller 0.4 per cent to US$142.3 billion.

Export demand has been growing significantly over the past two years as US manufacturers and farmers have gotten a boost from a weaker dollar against many other currencies.

Through the first 11 months last year, the deficit ran at an annual rate of US$709.1 billion, down 6.5 per cent from last year’s all-time high of US$758.5 billion. Analysts believe that the export boom will finally result in a drop in the trade deficit in 2007 after it set consecutive records for five years.

Critics of President George W Bush’s trade policies, however, say the declining deficits will still leave the imbalance at a painfully high level, which they contend reflects unfair trade practices of other nations that have contributed to the loss of more than three million US manufacturing jobs since 2000.

Trade is expected to be a key issue in this year’s presidential campaign, with many Democrats charging that the Bush administration has not fought hard enough to protect American workers and keep companies from shipping jobs overseas.

Much of their unhappiness is focused on China, where the US trade deficit through the first 11 months of last year totalled US$237.5 billion, the highest annual imbalance ever recorded with a single country – with December still left to tally.

The November deficit with China dipped slightly to US$24 billion, but that was down from a record high of US $25.9 billion set in October, when retailers were boosting orders for toys, games and video equipment to stock their shelves for Christmas.

Analysts predict further increases in the deficit with China in the months to come as US demand has been unfazed by a string of high-profile recalls of a number of Chinese products, everything from tainted toothpaste to toys with lead paint.

China reported on Thursday that its trade surplus through December with the world rose by 47.7 per cent to a record of US$262.2 billion with the December surplus coming in at US$22.7 billion, up 9.5 per cent from a year ago.

 

Source: AP (Business Times 12 Jan 08)

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