US trade deficit jumps to 5-year high on imports

US trade deficit jumps to 5-year high on imports

India News

The US trade deficit jumped to a near five-year high in January as cell phones and rising oil prices helped to push up the import bill, suggesting trade would again weigh on economic growth in the first quarter. The Commerce Department said on Tuesday the trade gap increased 9.6 per cent to $48.5 billion, the highest level since March 2012. The deficit was in line with economists forecasts. December’s trade shortfall was unrevised at $44.3 billion. When adjusted for inflation, the trade deficit rose to $65.3 billion from $62.0 billion in December. Both the inflation-adjusted exports and imports were the highest on record in January. The wider trade gap added to weak data such as housing starts, consumer and construction spending in suggesting the economy struggled to regain momentum early in the first quarter after growth slowed to a 1.9 per cent annualised rate in the final three months of 2016. The economy grew at a 3.5 per cent pace in the third quarter. Trade cut 1.7 percentage points from gross domestic product in the fourth quarter. The Atlanta Federal Reserve is forecasting GDP rising at a 1.8 per cent rate in the first quarter. The dollar was trading marginally higher, while prices for US government bonds were little changed. US stock index futures were slightly lower. The Trump administration is eyeing trade as it seeks four per cent annual GDP growth. President Donald Trump has vowed sweeping changes to US trade policy, starting with pulling out of the 12-nation Trans-Pacific Partnership trade pact.