The US trade deficit unexpectedly widened by 17% to $US46.6 billion in December from $US39.8 billion in November.
Economists had forecast a $US38 billion deficit as as the dollar value of energy imports tumbled.
This is the widest deficit since November 2012.
The story seems to be more about the strength of the US consumer’s demand for imported goods.
Imports climbed 2.2% to $US241.1 billion. Companies imported a record $US48.8 billion worth of consumer goods, which according to Bloomberg was a record.
TD Securities Gennadiy Goldberg speculates that US companies may also be trying to take advantage of cheap oil.
“The big surprise in the deficit data came in the petroleum sector, with crude imports rocketing to 313M from 238M in the prior month — a 31.7% increase,” Goldberg wrote. “We suspect that the sharp increase in crude oil imports could be a function of storage plays by domestic oil market participants, with a large number of oil investors racing to buy crude at lower prices and storing it amid contango plays.”
“What most forecasters missed is that even though the price per barrel of oil has been falling, the weekly figures showed a sharp jump in the volume of oil coming into the US,” Capital Economics Paul Ashworth noted. “Accordingly, while the price per barrel dropped to $US73.6, from $US82.9, the overall cost increased to $US18.2bn, from $US15.7bn, because the number of barrels imported rebounded to 8.0 million per day, from 6.3 million.”
Exports declined 0.8% to $US194.9 billion. Ashworth believes this is a reflection of a slowing global economy. Industrial supply exports fell 7.3% month-over-month.
Economists all warn that this means the Q4 2014 GDP esimates will be hacked.
“The revision implied by these numbers is -0.4 percentage points, raising the hit from net trade to a huge -1.4pp,” Pantheon Macroeconomics’ Ian Shepherdson said. “A good part of this will reverse in the first quarter.”