* U.S. December trade deficit narrows to $38.5 billion
* Industrial supplies like non-monetary gold boost exports
* 2012 trade deficit with China at record high
* Wholesale inventories decline 0.1 percent in December
By Jason Lange
WASHINGTON, Feb 8 The U.S. economy likely
expanded slightly in the fourth quarter as higher exports and a
slump in oil imports narrowed the trade gap, suggesting a
surprise drop in economic output reported last week was
America's trade deficit shrank in December to its narrowest
point in nearly three years in December, the Commerce Department
said on Friday.
That suggests trade added to economic growth in the final
three months of last year, rather than holding it back as the
government said last week when it estimated gross domestic
product fell at a 0.1 percent annual rate.
The GDP report had shocked economists, who had been looking
for the economy to expand at a 1.1 percent pace.
"Trade data for December paint a reassuring and encouraging
picture of the U.S. economy at the end of last year," said Chris
Williamson, chief economist at Markit.
A separate report from the Commerce Department showed
wholesale inventories unexpectedly declined in December.
While the decline in inventories would subtract from GDP,
economists said the drag was not big enough to offset the
positive impact of December's trade performance.
Taken together, the reports pointed to an economy that was
still growing at the end of the year, and was poised to grow at
a quicker pace in early 2013 as firms rebuild inventories to
keep up with demand.
Macroeconomic Advisers, a forecasting firm, said the data
pointed to a growth rate of 0.5 percent in the fourth quarter.
JPMorgan economist Michael Feroli said the decline in
inventories helped lead him to boost his forecast for first
quarter GDP growth to a 1.5 percent annual rate - a still-tepid
pace that would reflect the hit most Americans took in January
from higher taxes. Feroli and other economists expect growth to
pick up as the year progresses.
Prices for U.S. stocks rose as investors were impressed by a
batch of strong trade data, which included readings showing
stronger exports and imports by China during January as well as
the U.S. figures for December. Prices for U.S. government debt
The U.S. report showed the country's trade gap narrowed to
$38.5 billion in December, which was a much smaller deficit than
analysts polled by Reuters had expected.
U.S. exports increased $8.6 billion in December, boosted by
sales of industrial supplies, including a $1.2 billion rise of
In a reflection of America's current oil and natural gas
boom, petroleum exports rose by nearly $1 billion to a record
A fall in petroleum imports led overall purchases from
abroad to decline $4.6 billion in December. Both the price per
barrel and volume of imports fell, although those data are not
adjusted for seasonal swings.
For the entire year, the country's imports of crude oil fell
to their lowest levels since 1997 in terms of volume.
For all of 2012, the U.S. trade gap fell by 3.5 percent to
$540.4 billion as exports rose 4.4 percent. While trade was
still a drag on the economy, rising exports made it less of a
drag than in prior years.
While the overall deficit shrank last year, it grew with
China, raising the hackles of U.S. manufacturers who feel
Beijing gives its exporters an unfair edge by keeping its
"Congress and the administration must take on currency
manipulation," said Scott Paul, president of the Alliance for
But even the figures on China had a silver lining. While
U.S. imports last year from China increased to a record high, so
did America's exports to the country.
America's December trade deficit with China for goods, which
was not seasonally adjusted, narrowed by $4.5 billion on a drop