Trade deficit grew slightly in October
The U.S. trade deficit widened slightly in October as a record price for imported oil outweighed the export-spurring benefits of a weaker dollar, a Commerce Department report showed Wednesday.
Rising oil costs also propelled U.S. import prices 2.7% higher in November -- the largest gain in 17 years -- raising concerns about inflation, according to a separate report from the Labor Department.
The monthly trade gap widened 1.2% to $57.8 billion as the average price for imported oil jumped nearly 6%, to $72.49 a barrel. Minus petroleum, the deficit was its lowest since March 2004.
“The entire increase in the October deficit was due to the oil component, where higher prices and increased volumes pushed up the petroleum deficit by $2.3 billion,” said Ian Shepherdson, chief U.S. economist with High Frequency Economics.
The overall trade deficit shrank more than 8% in the first nine months of 2007 after hitting a record $785.5 billion for all of 2006.
The October report was more proof that a weak dollar and stronger growth overseas were boosting U.S. exports, which rose for the eighth consecutive month to a record $141.7 billion.
The boom in exports has helped maintain U.S. economic growth as other parts of the economy sagged.
“America’s exports are at an historic high and driving U.S. economic expansion as well as creating jobs at home,” U.S. Commerce Secretary Carlos Gutierrez said in a statement from Xianghe, China, where he is participating in trade and economic talks with Chinese officials.
“Export growth has been a significant contributor to our six years of uninterrupted economic growth and record 51 consecutive months of job growth,” Gutierrez said.
Even as the overall trade deficit narrowed, the bilateral trade gap with China has continued to rise, hitting a record $25.9 billion in October.
For the first nine months of the year, the trade gap with China totaled $213.5 billion. It is on a pace to surpass the record of $234 billion for all of 2006.
China is the third-largest market for U.S. exports.
The rise in oil prices helped push U.S. imports to a record $199.5 billion in October, even as the weaker dollar weighed on demand for other imported goods.
Rising energy prices also pushed import prices up 2.7% in November -- the highest since a 2.9% jump in October 1990, the Labor Department said. Import prices had been expected to rise 2%, according to economists.
