December trade gap widens slightly more than expected

WASHINGTON –The trade deficit widened slightly more than expected in December, and the bilateral trade deficit with China last year soared to a record high $295.5 billion.

The monthly trade gap swelled to $48.8 billion as goods imports climbed to the highest level since July 2008, just before the financial crisis caused world trade to plunge, a report from the Commerce Department showed on Friday.

Analysts surveyed before the report had expected the December trade deficit at $48.0 billion, up from a revised estimate of $47.1 billion in November.

U.S. exports grew slightly in December, with records set for petroleum, services and advance technology goods.

For the year, the U.S. trade gap rose 11.6 percent to $558.0 billion, the highest since 2008.

Exports last year rose 14.5 percent to a record $2.1 trillion, keeping the United States on pace to meet President Barack Obama’s goal of doubling exports in five years.

Imports grew 13.8 percent to a record $2.7 trillion, with records set in several categories.

Auto imports rose to the highest since 2007 and petroleum the highest since 2008. The average price for imported oil in 2011 was a record high $99.78 per barrel

The record trade deficit last year with China is certain to reinforce concerns in Congress about Beijing’s currency and trade practice ahead of a meeting next week between Obama and the Asian giant’s expected next leader, Vice President Xi Jinping.

December producer prices fall 0.1 percent, DOL report says

WASHINGTON ― Producer prices fell in December as companies paid less for gasoline and vegetables, although higher prices for light motor trucks pushed a measure of underlying inflation higher.

The Labor Department said on Wednesday its seasonally adjusted index for prices received by farms, factories and refineries fell 0.1 percent.

Economists polled by Reuters had expected wholesale prices to increase 0.1 percent.

Excluding volatile food and energy, core producer prices rose 0.3 percent last month, the biggest rise since July. That was above economists’ expectations for a 0.1 percent gain.

The data appears to send mixed messages about inflation pressures in the U.S. economy.

A drop in energy prices has encouraged Wall Street and the U.S. Federal Reserve to forecast inflation will cool in coming months. Energy costs for businesses fell 0.8 percent last month, with gasoline down 2.3 percent. Food prices fell 0.8 percent.

At the same time, higher core prices – if eventually passed on to consumers by businesses – might make the U.S. central bank more cautious about taking additional steps to help the still-struggling U.S. economy.

That said, about 30 percent of the gain in core prices were due to an increase in prices for light motor trucks, the Labor Department said.

Prices in auto sector have been affected in recent months by floods in Thailand that last year disrupted supply chains. Prices for light trucks rose 0.9 percent last month, the biggest rise since July.

Same-store sales seen up 4.3 percent in December

NEW YORK ― When top retailers post their December sales this week, Wall Street analysts are expecting them to report a healthy end to the holiday season, helped by discounts, improved consumer sentiment and tactics like extended hours and layaways.

Some 22 major chains, from Macy’s Inc and Target Corp to Costco Wholesale Corp. and Gap Inc. should post an aggregate 4.3 percent increase in December sales at stores open at least a year, according to Thomson Reuters, capping a season that started moderately but gained steam in December.

The top gainers are again expected to be discount chains like Costco, with its cheaper gasoline, and Target as shoppers sought out low prices.

Higher up the price spectrum, chains like Saks Inc., Nordstrom Inc. and Macy’s Inc should also do well, helped by the continued recovery of high end spending and a stock market that rebounded after swooning earlier in the fall.

But chains like J.C. Penney Co. Inc. and Gap, which are under pressure to slash prices to lure price conscious shoppers, are expected to be laggards again after seeing sales declines in November.

Penney sales should be flat, while Gap’s are expected to slip 0.5 percent, hurt by a 3 percent drop at its low-price Old Navy chain, according to Thomson Reuters data.”

Those that have been doing well will continue to do well,” said Richard Hastings, consumer strategist at Global Hunter Securities. “But there were broad-based improvements, so December should lift a few more boats.”

If December sales meet expectations, they would beat December 2010’s 3.1 percent jump.

Early signs showed December was shaping up to be a good month, helped by last minute shopping and strength after Christmas Day. The ICSC/Goldman Sachs weekly chain store sales index rose 4.5 percent during the week ending Dec. 24.The National Retail Federation in mid-December raised its forecast to a 3.8 percent increase for November and December, from 2.8 percent, based in part on a strong start to December.

November same-store sales rose 2.9 percent, according to the Thomson Reuters index, missing analyst forecasts despite a record turnout on Black Friday, the day after Thanksgiving that puts the season into high gear.