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US trade gap dips to 64.3 billion dollars
By Claire Gallen
AFP
WASHINGTON
Petroleumworld.com 11 10 06
Falling crude oil prices helped the US trade deficit retreat from record highs to 64.3 billion dollars in September, the Commerce Department said Thursday.
It was the lowest figure since April and came after two months of record deficits, with the shortfall in goods trade alone falling by the biggest amount since early 2001.
However, the deficit with China again grew to record highs to account for two-thirds of the US total. That could accentuate political tensions over trade after the Democrats recaptured control of Congress in elections this week.
"This record shouldn't surprise anyone. China cheats to gain every advantage it can over US manufacturers," said Auggie Tantillo, head of the American Manufacturing Trade Action Coalition, an industry group.
Imports fell 2.1 percent to 187 billion dollars in September, while exports increased 0.5 percent to 123.2 billion, the Commerce Department report showed.
The deficit in goods fell 4.8 billion dollars to 70.1 billion dollars, while the surplus in services was down 100 million dollars to 5.8 billion.
A big portion of the decline in imports came from petroleum, down 3.3 billion dollars.
Total oil imports in September fell 10.5 percent to 26.3 billion dollars as the average price per barrel of crude oil fell for the first time in six months, declining 3.60 dollars to 62.52 dollars a barrel.
The Commerce Department revised its figure for August to show a 69-billion-dollar total deficit, from an earlier estimate of 69.9 billion.
But the trade gap with China was another record at 23 billion dollars in September, after 22 billion in August. Imports from China rose 3.3 percent to a record 27.6 billion dollars.
That could buttress complaints from some US lawmakers that the administration should get tough over China's trade policies, notably by forcing Beijing to dramatically revalue its currency.
Several Democratic candidates rode to victory in Tuesday's election by fighting angry campaigns against an exodus of US manufacturing jobs to China and other cheap locations abroad.
Analysts say the Democratic victory could alter the landscape for US trade policy in the remaining two years of Republican President George W. Bush's term.
"I'm not sure that anything can or should be done, but it's a potential political problem," Global Insight chief US economist Nigel Gault said.
"If the US economy were to slow, then politicians start looking for scapegoats and the Democrats are less favourable to free trade than Republicans, so the rhetoric could well be turned up against China," he said.
Lehman Brothers economist Drew Matus noted that the US deficit had benefited from a sharp fall in oil prices, which are well down from summer highs above 78 dollars a barrel.
"However, the general theme is that the US still likes to buy a lot more imported goods than we can sell overseas, so the US deficit is unlikely to go away any time soon," he said.
The Commerce Department report showed that the US deficit with the OPEC oil-exporting cartel countries fell to 9.2 billion dollars from 11.2 billion in August.
The shortfall with the European Union narrowed to 7.0 billion from 11.0 billion; the deficit with Japan decreased to 6.7 billion dollars from 7.5 billion.
Nomura economist David Resler said a lower deficit was already factored into government calculations that showed a preliminary estimate for third-quarter growth of 1.6 percent, down from 2.6 percent in the second quarter.
But he added: "These (trade) data support the presumption that an improving trade balance will be an important counterweight to the slumping housing sector."
AFP 09 1656 GMT 11 06
Copyright© 2006 AFP. All Rights Reserved.
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