US trade deficit narrows in December

The US trade deficit in December narrowed nearly 21 per cent to $38.5 billion from $48.6 billion a month before on the back of strong exports and lesser import of oil, according to data released by the US commerce department yesterday.

Goods deficit decreased to $56.2 billion, down by $9.2 billion from November and services surplus increased to $17.7 billion, 0.7 billion improvement over the previous month.

The trade deficit was well below the median forecast of $46 billion, based on a Bloomberg survey of economists and the least in nearly three years.  The surge in sale of petroleum products and slump in crude oil import led to the smallest petroleum deficit since August 2009.

The latest data indicate that the world's largest economy has performed better than earlier expected in the fourth quarter.

According to some analysts, the trade figures signal an encouraging state of the US economy towards the end of the year with the possibility of an upward revision of the fourth quarter gross domestic product (GDP).

Advance GDP data released last week indicated that the US economic output shrank surprisingly in Q4 registering a 0.1-per cent contraction, for the first time since the second quarter of 2009, after posting a healthy 3.1-per cent expansion in the third quarter. (See: US economy contracts 0.1% in Q4)