Stacked containers at the Port of Los Angeles, on Nov. 22, 2021.MIKE BLAKE/Reuters
The U.S. trade deficit widened slightly in December, but contracted by the most in 14 years in 2023 as imports declined and exports increased.
The report from the Commerce Department on Wednesday also showed the United States staking its position as a major global oil producer, with inflation adjusted petroleum exports hitting a record high in December.
Economists expected trade, which added to gross domestic product growth last year, to remain supportive to the economy in 2024, though Red Sea shipping disruptions posed risk.
“The largest risk resulting from disruptions to global shipping is likely higher prices for goods, but longer lead times to receive goods could lead to either over– or underbuilding of inventories, which presents risks to our near-term outlook for imports,” said Matthew Martin, a U.S. economist at Oxford Economics.
The trade deficit increased 0.5 per cent to $62.2-billion, the Commerce Department’s Census Bureau said. Data for November was revised higher to show the trade gap shrinking to $61.9-billion instead of $63.2-billion as previously reported.
December’s trade shortfall was in line with economists’ forecasts and close to the assumptions made by the government in its advance fourth-quarter GDP estimate published last month. Trade added 0.43 percentage point to the economy’s 3.3 per cent annualized growth rate in the October-December quarter after being neutral for two straight quarters.
The trade gap narrowed 18.7 per cent in 2023, the largest drop since 2009, to $773.4-billion. It represented 2.8 per cent of GDP, down from 3.7 per cent in 2022. Trade added more than half a percentage point to the economy’s 2.5 per cent growth last year.
In December, exports increased 1.5 per cent to $258.2-billion. Goods exports shot up 1.8 per cent to $171.2-billion. Exports of industrial supplies and materials, which include petroleum, increased $3.3-billion, amid rises in nonmonetary gold, other petroleum products and crude oil.
Consumer goods exports rose as did those of foods, feeds and beverages. Exports of services climbed $0.8-billion to a record $87.0-billion, lifted by travel, transport and financial services.
Imports increased 1.3 per cent to $320.4-billion. Goods imports rose 1.5 per cent to $260.3-billion. There were increases in imports of consumer goods, mostly pharmaceutical preparations, and cellphones and other household goods.
Industrial supplies and materials imports, which include petroleum, also rose, but capital goods fell as did imports of automotive vehicles, parts and engines.
Imports of services increased $0.5-billion to $60.1-billion amid a rise in transport. Travel services declined. The services surplus in December was the highest on record.
When adjusted for inflation, the goods trade deficit declined 1.4 per cent to $82.8-billion in December. The so-called real dollar exports of petroleum rose to a record $17.3-billion from $15.0-billion in November. Real dollar exports of foods, feeds and beverages where the highest June 2022, while those of automotive vehicles, parts and engines hit a 1-1/2-year high.