U.S. trade deficit widens to $48.8B
Europe expected to hold back U.S. growth this year
The U.S. trade balance widened in December, as a strengthening American recovery outpaced global growth.
The U.S. Commerce Department said Friday that the overall trade deficit widened to $48.8 billion US as imports grew at a faster pace than exports. It was the largest imbalance since June.
The report was released the same day as Statistics Canada reported that Canada's trade surplus unexpectedly grew to a three-year high in December from November.
Exports to Europe grew, reversing a steep decline in November, but with turmoil continuing in Greece, some economists remain concerned that Europe’s debt crisis will still weigh on the U.S. economy this year.
Imports rose 1.3 per cent, largely because the U.S. bought more foreign autos, auto parts and industrial machinery. Exports increased 0.7 per cent.
"The broad based gains in imports reveal domestic strength, while the soft profile for capital and consumer exports reveals softening foreign demand," TD economist Alistair Bentley said in a commentary.
"Even the one category of strength for U.S. exports – autos – can likely be chalked up to domestic strength, as it represents supply chain linkages in domestic auto production with Canada," he said.
Europe consumes a fifth of U.S. exports
Bentley predicted the U.S. balance of trade will widen further this year "as the economic momentum in the U.S. continues to defy softening global growth."
U.S. exports to Europe rose 7.2 per cent. That followed November's decline of more than six per cent.
Still, exports to the 17 nations that use the euro grew just 1.7 per cent in December from November. And exports to the euro zone fell 1.6 per cent in December from the same month in 2010.
Europe consumes nearly one-fifth of America's exports. Some economists fear the continent may already be in a recession.
"With the danger that the euro zone enters a deep recession still very real, weaker demand from Europe will weigh on US export growth both this year and next," said Paul Dales, senior U.S. economist with Capital Economics.
For all of 2011, the deficit climbed to $588 billion, the highest level since 2008. Both exports and imports rose to all-time highs.
With files from The Associated Press