US trade deficit on goods jumps in December

America's shortfall in trade on goods with the rest of the world jumped at the end of 2018

The deficit in trade on goods widened by 12.8% month-on-month to reach $79.5bn, easily overshooting economists' forecasts for an increase to $75.3bn.

Goods exports declined by 2.4% versus November to reach $135.7bn, while imports rose by the same proportion to $215.2bn.

According to Pantheon Macroeconomics's Ian Shepherdson, no more than half the drop in exports, "and likely less", could be attributed to the drop in crude oil prices.

On the back of Wednesday's figures, Shepherdson said that the rate of growth in fourth quarter US gross domestic product was now likely to be revised down by four tenths of a percentage point to 1.9%.

Stockpiling by firms as a precautionary move ahead of the soon to be imposed sanction on Chinese goods also played a hand, he said.

"The combination of relatively strong domestic demand, boosted by tax cuts and lower gas prices, coupled with softening global demand, is a toxic combination. Second, the threat of increased tariffs on imports from China appears to have prompted precautionary inventory-building," Shepherdson explained.

"This won't continue indefinitely, and some of it should reverse when a trade deal with China is signed. For now, though, the rate of increase of the deficit looks alarming, and it means that foreign trade was a drag on Q4 GDP growth."