The US trade deficit jumped to a record $168.59 billion (€160.9 billion) last year as the robust domestic economy sucked in imports from countries trying to export their way out of economic turmoil.
However, the Commerce Department said the gap narrowed unexpectedly in December to $13.79 billion from $15.26 billion in November. Wall Street analysts had been expecting a $15.8 billion trade gap in December.
The record deficit for 1998, up 53 per cent from $110.21 billion in 1997, had been predicted for the last several months by US trade officials as economic turmoil gripped Asia, Russia and Brazil. The previous record, $153.3 billion, was set in 1987.
Financial markets greeted the lower-than-expected December trade gap as a positive sign for the US economy, and it helped trigger a rise in the value of the dollar. The euro fell to $1.1120 in late trading, its lowest level since its launch on January 1st. The dollar moved up briefly against the yen to 120.20 but fell back later.
"We saw a fairly sharp drop in imports but exports, in general, remain weak as the dollar remains relatively strong and many economies are experiencing softness," Mr Rick Egelton, deputy chief economist at Bank of Montreal, said of the December figures.
Economists said the surprise December data could prompt them to revise upwards their estimates for economic growth in the last quarter of 1998. Some said it could mean the economy grew by about 6 per cent instead of the government's 5.6 per cent advance estimate.
The 1998 record trade gap reflected the overall strength of the US economy and weakness among its many trading partners including Japan.
The US trade deficit for manufactured goods rose to a record $248 billion in 1998 from $198 billion in 1997 while the surplus in services trade fell to $79 billion from $88 billion in 1997. The US typically runs a deficit in merchandise trade and a surplus in services trade.
In December, both imports and exports fell. US exports fell to $78.5 billion from $79 billion in November, while imports fell to $92.28 billion in December from $94.2 billion in November.
