WASHINGTON A big jump in oil imports swelled the U.S. December trade deficit to $40.2 billion, an unexpected widening that suggested U.S. economic growth was not quite as strong as initially thought in the fourth quarter.
The Commerce Department's report on Wednesday, showing a 10.4 percent jump in the trade gap, came as both U.S. exports and imports recorded large gains for the month.
The bigger-than-expected deficit will "shave a couple of tenths off" the U.S. government's estimate the economy grew at a 5.7 percent annual rate during October to December, said Nigel Gault, chief U.S. economist at IHS Global Insight.
"But it is hard to describe the trade figures as bad news, since they show a continuing robust rebound in world trade" after a taking a big tumble in the first half of year because of the global financial crisis, Gault said.
Markets mostly shrugged off the report, focusing instead on comments from Federal Reserve Chairman Ben Bernanke outlining how the central bank will reverse extraordinary stimulus measures when the time comes.
Bernanke, in testimony prepared for a congressional committee, made clear the economy was still too fragile for the Fed to retreat from its easy money policy now.
"Although at present the U.S. economy continues to require the support of highly accommodative monetary policies, at some point the Federal Reserve will need to tighten financial conditions," he said.
At midday, stocks were slightly lower while Treasury bond prices also eased.
The trade report showed exports rose 3.3 percent in December to $142.7 billion, the biggest percentage increase since March 2007 and the eighth consecutive monthly gain. But that was outpaced by a 4.8 percent rise in imports to $182.9 billion.
For a graph showing the year-on-year gain in U.S. exports, please click on: link.reuters.com/hum78h
Oil accounted for most of the import rise, accompanied by smaller increases for autos and capital goods.
The average price for imported oil rose to $73.20 per barrel in December, which along with increased volume sent the monthly U.S. petroleum import bill to $28.1 billion. Both were the highest since October 2008.
Imports of consumer goods were essentially flat again in December in a sign many consumers are still keeping a tight grip on their pocketbooks.
SMALLEST ANNUAL TRADE GAP SINCE 2002
For the year, the U.S. trade deficit totaled $380.7 billion, down 45.3 percent from 2008 in the biggest drop since 1991. It was also the smallest U.S. trade gap since 2002.
U.S. exports fell a record 15 percent to $1.55 trillion in 2009, while imports tumbled an even larger record 23.3 percent to $1.93 trillion.
President Barack Obama has set a goal of doubling U.S. exports to more than $3 trillion in 2014 to help support or create 2 million American jobs.
"The administration's National Export Initiative is focused on expanding trade advocacy, improving access to credit, and removing trade barriers that prevent fair access to foreign markets," U.S. Commerce Secretary Gary Locke said.
The politically sensitive U.S. trade deficit with China fell in December to $18.1 billion as U.S. exports to the Asian manufacturing giant hit a record $8.4 billion.
The annual trade gap with China also fell to $226.8 billion, from a record $268.0 billion in 2008.
China's own trade data released on Wednesday showed its exports rose strongly in January from a year earlier, but tumbled from December.
The deficit with China is by far the largest the United States has with any country and symbolizes what many U.S. politicians believe are China's unfair trade practices.
Much of that concern is focused on China's exchange rate for its currency, the renminbi, which Beijing has held constant at about 6.83 yuan per dollar since July 2008.
Western experts say China's currency is undervalued by 25 to 40 percent, effectively subsidizing China's exports and taxing its imports at the expense of other countries.
Last week, Obama told senators the United States needed to get tough on countries such as China that undervalue their currencies.
Meanwhile, a separate report showed U.S. mortgage applications dipped last week, reflecting reduced demand for home purchase loans even as rates on 30-year loans fell to their lowest since December.
A continuation of lackluster demand for home purchase loans would not bode well for the U.S. housing market, which remains highly vulnerable to setbacks and heavily reliant on government intervention.
(Editing by Andrea Ricci)