Trade deficit jumps higher than expected

WASHINGTON --- The U.S. trade deficit jumped to the highest level in 10 months as an improving U.S. economy pushed up demand for imports. However, exports rose also, boosted by a weaker dollar, supporting the view that American manufacturers will be helped by a rebounding global economy.

The Commerce Department reported Tuesday that the trade deficit jumped 9.7 percent to $36.4 billion in November, a bigger imbalance than the $34.5 billion deficit economists had forecast.

Exports rose 0.9 percent, the seventh consecutive gain, as demand was up for American-made autos, farm products and industrial machinery. Imports, however, rose a much faster 2.6 percent, led by a 7.3 percent rise in petroleum imports.

The politically sensitive deficit with China narrowed by 10.8 percent in November to $20.2 billion as U.S. exports to China hit an all-time high. Through November, the deficit with China is still the largest the United States incurs with any country, but it is down 15.9 percent from the same period in 2008.

Through the first 11 months of 2009, the overall U.S. trade deficit in 2009 was running at an annual rate of $371.59 billion, down by nearly half from last year's imbalance of $695.94 billion. That improvement reflected a deep recession in the United States, which cut sharply into consumer demand for foreign products.

But as the U.S. economy has begun to mount a recovery, imports have started to rise. Economists expect that development will continue in 2010, and they are predicting a higher trade deficit as a result.

However, they also contend that the fortunes of American manufacturers will be lifted by a continued rise in demand for U.S. exports as America's major overseas markets also mount a recovery. The fall in the dollar against most major currencies since the U.S. currency hit a 2009 high last March is also expected to boost export sales.

Nigel Gault, an economist at IHS Global Insight, said he expected the trade deficit to rise by about 24 percent next year. But even with that gain, he said strong overseas demand and a weaker dollar would lift the fortunes of American manufacturers.

He said after averaging about $31 billion a month in 2009, the trade deficit for 2010 would average about $38 billion a month, still well below the $60 billion-plus deficits seen as recently as 2008.

"We believe that exports will continue to grow very strongly in 2010, but we will also be pulling in more imports because the U.S. economy is doing better," Mr. Gault said.


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