US trade deficit grows to record $60.3bn

Joe Richter, Bloomberg

The trade gap increased 7.7% from the previous record of $56bm in October, the Commerce Department said in Washington. The imbalance with China held close to a record and accounted for more than a quarter of the total deficit.

The $561.3bn (423.2bn) excess of imports over exports through November exceeds the record for all of 2003. A rebound in consumer spending increased demand for imported products in the world's largest economy.

The dollar fell after the report increased investor concerns about financial imbalances. The dollar's 4.6% decline last year against a basket of currencies is supposed to strengthen exports by making US goods cheaper, and exports climbed to a record in October.

Imports rose 1.3% for the month to $155.8bn (117.4bn). Exports fell 2.3%, the first decline since June, to $95.6bn (72bn). Exports were a record $97.8bn in October.

The trade deficit is a negative in the Commerce Department's estimates of gross domestic product because of the assumption that the imports replace US products.

Fed policy makers may use the numbers to continue raising the benchmark interest rate, economists said. Fed policy makers may view the "rapid widening" as a sign of growth in demand and worry about the deficit's "potential impact on the dollar and thus on inflation," said John Ryding, chief US economist at Bear Stearns & Co in New York.

Imports of oil, consumer goods and food and farm products rose to records. Petroleum imports were valued at $13.4bn (10bn), while increased volume offset lower prices than in October, when futures prices reached a record.

Rising imports from China have added to the US trade deficit and caused friction between the two countries. The trade deficit with China narrowed to $16.6bn (12.5bn) from a record $16.8bn. For the year, the trade gap with China is $147.7bn (111.3bn), about one-fourth the US deficit with all countries.

The US is pressing China to change the yuan's decade-old peg of about 8.3 to the dollar, saying the fixed rate depresses the yuan's value giving Chinese manufacturers an unfair advantage by making their goods cheaper abroad.