U.S. trade deficit increases in January, better than expected

The U.S. trade deficit increased slightly in January 2008, up 0.6% to $58.2 billion, as oil prices pushed the gap higher, despite an increase in exports, the U.S. Commerce Department announced Tuesday.

Analysts surveyed by Bloomberg News had expected the trade deficit to total $59.5 billion in January 2008.

Meanwhile, the December 2007 trade gap was revised lower to $57.9 billion from $58.8 billion, the Commerce Department said.

In January 2008, exports increased to $148.2 billion while imports rose to $206.4 billion. Exports for oil, industrial supplies, and consumer goods among others increased, while imports for oil and autos also increased. The oil import component was magnified by the rise in the price of oil.

Economic Analysis: In all, a luke-warm January 2008 trade deficit report. Exports continue to increase, aided by the weak dollar. Meanwhile, if one factors out the higher oil price, the import total would have been considerably lower. Still, the $58.2 billion monthly trade gap remains too high from a balance-of-payments standpoint, hence the nation must do more to lower its consumption of foreign goods.