Reflecting a surge in imports and a slump in exports, the Commerce Department released a report on Thursday showing the U.S. trade deficit unexpectedly widened in the month of December.
The Commerce Department said the trade deficit grew to $70.3 billion in December from a revised $53.0 billion in November.
Economists had expected the trade deficit to shrink to $55.8 billion from the $56.8 billion originally reported for the previous month.
The trade deficit increased for the second consecutive month after plunging to its lowest level in over sixteen years in October.
The unexpectedly wider trade deficit partly reflected a continued surge in the value of imports, which shot up by 3.6 percent to $357.6 billion in December after spiking by 4.2 percent to $345.3 billion in November.
Significant growth in imports of industrial supplies and materials and capital goods such as computer accessories more than offset a steep drop in imports of pharmaceuticals.
The report also showed a continued slump in the value of exports, which tumbled by 1.7 percent to $287.3 billion in December after plunging by 3.4 percent to $292.3 billion in November.
Exports of non-monetary gold saw another significant decrease, while exports of pharmaceuticals and semiconductors increased.
“December’s report suggests net trade will only contribute 0.1ppts to Q4 GDP growth, which adds slight downside risk to our baseline forecast,” said Grace Zwemmer, U.S. Economist at Oxford Economics. “This will likely be offset by increases in business equipment spending, though.”
“Depreciation in the dollar may support exports in the near term, by making US goods relatively cheaper in foreign markets,” she added. “This adds upside risk to our forecast for export growth and increases the odds that net trade makes a positive contribution to GDP growth.”
The Commerce Department also said the goods deficit jumped to $99.3 billion in December from $83.6 billion in November, and the services surplus narrowed to $29.0 billion in December from $30.6 billion in November.
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