Trade Deficit for January Sets Record : Rises 9.3% Despite Declining World Oil Prices, Weaker Dollar
The U.S. trade deficit swelled to a monthly record of $16.5 billion in January despite declining world oil prices, the Commerce Department said today.
It marked a sharp 9.3% rise from the December merchandise trade deficit of $15.1 billion, a revision from the $17.4 billion reported earlier.
January’s deficit was $4.1 billion greater than the $12.4 billion average monthly deficit recorded last year.
The January figures showed that the falling U.S. dollar has not yet had any practical impact on the trade balance.
In theory, a weaker dollar makes U.S. goods less expensive and more competitive abroad while raising the price of imports. The dollar has dropped nearly 30% against major foreign currencies since it peaked a year ago.
4.5% Crude Oil Decline
Keeping the January deficit from being even higher was a 4.5% decline in the cost of crude oil imports, to $3.3 billion, reflecting recent per-barrel price declines. Total imports of all petroleum products, however, actually increased by 1.7%, to $5.2 billion for the month, the department said.
Department analysts said that oil imported in January was generally based on contracts entered into months ago and thus does not reflect in full the recent drops in oil prices--declines they said will be more pronounced in next month’s figures.
The January report reflects a change in accounting procedures. In the past, the Commerce Department had adjusted the trade figures to discount the effect of periodic, predictable seasonal influences. Now, the department is no longer doing this, reporting instead the actual import and export figures. December’s figure was revised to reflect the new system.
Thus, what had been a record $17.4-billion deficit in December was downgraded substantially once seasonal fluctuations were taken out.
Largest Import Level Ever
Both imports and exports increased in January, but imports grew at a far swifter pace.
In all, January imports totaled $33.5 billion, the largest level ever and up 4.1% from December. Exports totaled $17.0 billion, up a tiny 0.07% from December.
Imports from Japan outpaced exports last month by $5.5 billion, accounting for roughly one-third of the entire deficit, the Commerce Department said.
The trading deficit with Western Europe in January was $3.0 billion; with Canada, $1.7 billion; with Taiwan, $1.2 billion, and with the Organization of Petroleum Exporting Countries, $1.8 billion.
Farm Exports Decrease
Agricultural exports decreased 3.7% in January, to $2.5 billion. Imports of manufactured goods increased by the same 3.7% in January, to $23.5 billion.
Many economists contend that it may still be months before the trade picture brightens. “The trade deficit will stabilize, but I don’t think we’ll see it begin to turn around until late in the year,” said Lawrence Chimerine, president of Chase Econometrics in Bala Cynwyd, Pa.
And U.S. Trade Representative Clayton Yeutter, in the Administration’s annual trade report to Congress, also released today, said the nation is clearly losing ground to Japan and the newly industrialized countries of East Asia.