December trade deficit at widest in six months

WASHINGTON (MarketWatch) � The trade deficit widened in December to a six-month high, the Commerce Department said Friday, as the pickup in the U.S. economy attracted more imported goods.

The nation�s trade deficit expanded 3.7% in the final month of 2011, to $48.8 billion � the largest since June � from a revised $47.1 billion in November, the government�s data showed.

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The widening of the deficit in December was close to forecasts. Economists surveyed by MarketWatch had expected the deficit hit $48.5 billion. See comprehensive MarketWatch economic calendar.

Stocks were broadly lower on Friday as investors focused on the European debt situation. The Dow Jones Industrial Average DJIA � was recently down 139 points to 12,752.

For all of 2011, the U.S. deficit totaled $558 billion, up 11.6% from 2010. Exports of goods and services rose 14.5% to a record $2.1 trillion, as imports increased 13.8% to $2.7 trillion.

All of last year�s increase was due to a rise in oil imports linked to the higher oil prices, said Paul Dales, senior U.S. economist at Capital Economics.

The non-petroleum deficit narrowed to 1.5% of GDP in 2011 from 1.6% in the previous year.

The U.S. trade deficit with China hit a record $295.5 billion in 2011.

The Obama administration, seeing to take a tougher stance in trade disputes with China, recently announced a task force to monitor unfair global trading practices including in China.

The pace of export growth in goods and services in 2011 keeps the U.S. on track to reach President Barack Obama�s goal of doubling U.S. exports in five years.

But some economists believe that a better gauge of competitiveness would be to measure U.S. exports of goods alone without price changes.

By this measure, exports grew only 5.4% on a year-on-year basis over the last 12 months.

Dales said there has been a sharp easing of exports in the last three months, led by fewer exports to the euro-zone.

�With the danger that the euro-zone enters a deep recession still very real, weaker demand from Europe will mean that overall U.S. exports may struggle to rise at all this year,� Dales said.

Friday�s trade data for December is expected to make a small upward revision to government estimates of U.S. gross domestic product for the fourth quarter.

Late last month, the government reported that growth in the economy as measured by the broadest gauge of goods and services accelerated to a 2.8% annual rate in the fourth quarter, with trade acting as a slight drag. Government statisticians factored in a slightly wider goods-only December deficit in their estimate than occurred, economists said.

At the moment, many economists expect Q4 GDP to be revised up to a 3.0% growth rate

December details

In December, both imports and exports rose, but imports expanded at a faster pace.

Exports increased 0.7% to $178.8 billion for the month. Imports rose 1.3% to $227.6 billion in December, the highest since July 2008.

While an increase in the price of that oil was a factor in the widening deficit, the U.S. also imported more capital and consumer goods in December.

The deficit excluding petroleum widened 7.2% in December to $36.5 billion. This is the highest level since June 2010.

The value of U.S. crude-oil imports rose to $29.0 billion in December from $27.2 billion in November as the price of a barrel of oil rose to $104.13 from $102.50 in the previous month. The quantity of crude imports rose to 9.0 million barrels.

In a separate report, Thomson Reuters and the University of Michigan reported that consumer sentiment weakened in late February.