US trade deficit in January largest since 2012

WASHINGTON, Mar. 7 (AFP)

The US trade gap shot up in January to its highest monthly level in almost five years, the
Commerce Department reported Tuesday, and analysts say trade is likely to drag down growth.
The data showed trade was robust, with exports and imports of goods and services hitting their
highest levels for a single month since December 2014.
The trade deficit jumped to $48.5 billion, a $4.2 billion increase from December and the
highest since March 2012, driven in part by a $1.2 billion monthly drop in exports of civilian
aircraft and engines and rising oil imports.
The result, a 9.6 percent monthly increase, matched analysts expectations. The trade gap was
up nearly 12 percent compared to January 2016, with an 8.3 percent increase in imports
outstripping a 7.4 percent increase in exports.
The January increase continues the trend in 2016 which posted the highest annual trade
deficit in four years. The US trade deficit in goods with China rose nearly 13 percent over
December's level. Widening deficits were also recorded with Mexico and Saudi Arabia. Jim
O'Sullivan of High Frequency Economics said if the total deficit remains high through March it
could decrease first-quarter growth by as much as a percentage point.
"We doubt that large a drag will be sustained in February and March but the data are negative
for Q1 GDP nonetheless," he said in a client note, but noted that the first quarter tends to see
lower growth historically.
Despite the big move in aircraft exports, Ian Shepherdson, chief economist at Pantheon
Macroeconomics, pointed to the modest increase in exports excluding oil and aircraft, which
were overwhelmed but a big jump in those imports, what he calls the "core deficit."
"We're hoping for better news on core trade in February and March," he said, "but at this
point our working assumption has to be that net trade will be a significant drag on Q1 GDP
growth, subtracting perhaps 0.7 percentage points."
 Australia holds rates as soaring Sydney housing prices
stability risk
SYDNEY, Mar. 7 (StraitsTimes)
Australia kept interest rates unchanged on Tuesday (March 7) as risks from Sydney's soaring
property prices outweighed subdued inflation. Reserve Bank of Australia governor Philip Lowe
and his board left the cash rate at 1.5 per cent following strong growth and trade performances in
the final three months of last year. The decision was expected by all 29 economists surveyed by
Bloomberg.
"There's a recognition the housing market has strengthened even further, but there's not a lot
more in the statement," said Mr Matthew Peter, chief economist at QIC in Brisbane, who sees
high household debt constraining consumption and domestic demand. "The RBA is cornered.
They can't cut and they can't hike."
Sydney housing demand remains strong as buyers appear to conclude city property is a one-
way bet and keep ratcheting up record debt. That's despite stratospheric house prices partly
stoked by high population growth and a lack of residential construction. The central bank has left
policy unchanged to avoid further inflaming the market, while resurgent commodity prices and
higher exports are providing a boost to national income.
"Conditions in the housing market vary considerably around the country. In some markets,
conditions are strong and prices are rising briskly," Mr Lowe said in his statement. "Borrowing
for housing by investors has picked up over recent months."