Trade deficit in U.S. jumps on pre-holiday surge in imports

Export Outlook

American manufacturers are selling more overseas. The Tempe, Arizona-based Institute for Supply Management said its factory export gauge rose in December to a seven-month high. Commerce Department data show exports slumped in October by the most in almost four years.

Companies such as Alcoa, the largest U.S. aluminum producer, are counting on higher demand from recovering economies led by China.

Alcoa is projecting aluminum prices will rise with “China rebounding, Europe kind of muddling through -- probably a little better than what most people thought -- and the U.S., hopefully avoiding to hit the debt ceiling and growing at the same pace that it has been growing last year,” Chief Executive Officer Klaus Kleinfeld said on a Jan. 8 earnings call.

The November trade data may have also been influenced by port disruptions. Superstorm Sandy made landfall Oct. 29, causing billions of dollars in damage along the East Coast and delaying freight traffic in the region. In addition, clerical workers at the ports of Los Angeles and Long Beach, the largest U.S. port complex, went on strike Nov. 27 for eight days, affecting about $1 billion of trade a day.

Global Rebound

China’s exports jumped 14.1 percent from a year earlier, the most since May, a report showed yesterday. Together with a 19-month high in the pace of China’s manufacturing expansion reported Dec. 31, the figures are boosting optimism that a recovery in the world’s second-biggest economy is gaining traction after a seven-quarter slowdown.

A report from the Labor Department today showed prices of goods imported into the U.S. unexpectedly dropped 0.1 percent in December after falling 0.8 percent the prior month. Economists projected the gauge would rise 0.1 percent, according to the median estimate in a Bloomberg survey.

The cost of imported fuel decreased 0.1 percent in December from the prior month. Import prices minus fuel also declined 0.1 percent last month.

For all of 2012, import prices fell 1.5 percent, the first annual drop since they retreated 10.1 percent in 2008.

Bloomberg News

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