Rising oil price widens US trade gap

The US trade deficit grew wider than expected in January, as record exports could not offset the effects of soaring oil prices and growing domestic demand, government figures showed on Thursday.

The trade gap widened by 14.9 per cent to $46.3bn, up from a revised $40.3bn in December, according to the commerce department. Wall Street analysts had expected the deficit to grow to a more modest $41.5bn.

Imports surged by 5.2 per cent to $214.1bn because of higher oil prices and greater domestic appetite for industrial supplies, cars and consumers goods. Oil accounted for about a fifth of the widening trade gap.

The rise in imports outpaced that of exports from the US, which grew by 2.7 per cent to a record $167.7bn in January. The US exported more industrial materials, food and capital goods.

“The US economic recovery and unseasonably cold weather bolstered demand for imported oil despite higher oil prices,” said Michael Woolfolk, analyst at BNY Mellon Global Markets. “Stronger growth this year will be accompanied by larger trade deficits – regardless of the level of oil prices.”

In the past 12 months the US trade shortfall with the rest of the world has widened by almost 34 per cent as global demand has rebounded and the US has boosted consumption. Analysts expect escalating political turmoil in the Middle East to continue to inflate oil prices.

Meanwhile, the US deficit with China, its most politically sensitive trade partner, grew by 12.5 per cent to $23.3bn in January, accounting for more than half of the US deficit with the rest of the world. Deficits with the European Union, Japan and Canada eased during the month.

Separately on Thursday, the US labour department said that new claims for jobless benefits had grown more that expected last week.

Initial jobless claims climbed by 26,000 to 397,000. In spite of the rise, it was the third consecutive week that claims were below the 400,000 mark, signalling that job creation is occurring at a more healthy pace. That has left the less volatile four-week average of new claims at 392,250.

The number of idle US workers continuing to make jobless claims is continuing to decline, falling by 20,000 to 3.8m.