March 10, 2007	Saturday	Safar 20, 1428

WASHINGTON, March 9: The US trade deficit narrowed to $59.1 billion in January thanks to record-breaking export growth, but cheap Chinese goods still flooded American malls, data showed on Friday.

The shortfall fell from the revised December figure of $61.5 billion, the commerce department said. Analysts said that should help US economic growth, as exports add to gross domestic product (GDP).

The trade report coincided with the labour department's latest "non-farm payrolls" survey, which showed that US employers added 97,000 jobs in February, despite weakness in the housing and auto sectors.

"This is all pretty consistent with the Goldilocks economy," Wachovia economist Jason Schenker said of the two reports, using Wall Street jargon for an economy that is neither too hot nor too cold.

Global Insight chief economist Nariman Behravesh said the January fall in imports reflected a replenishing of company stockpiles and was unlikely to last.

But Democratic Senator Charles Schumer said: "Softening job growth combined with high trade deficits are a toxic brew for the American economy."

Investors hope the Federal Reserve will take heart from the "Goldilocks" scenario and leave its interest rates on hold, or even start cutting them later this year.

Total imports fell 0.5 per cent to $185.8 billion last month while exports jumped 1.1 per cent to a new record of 126.7 billion.

US exports of capital goods grew by $1.0 billion from December to January, consumer goods increased 500 million and foods, feeds and beverages went up 300 million.

But America's politically sensitive deficit with China surged 12 per cent to $21.3 billion, with US consumers as hungry as ever for mass-market Chinese products.

US Treasury Secretary Henry Paulson has been in China this week on his latest mission designed to prod the booming nation's leadership into more reform of its currency and trading regimes.

China accounted for the lion's share of the record annual US trade deficit of $764 billion racked up in 2006.

"It should raise red flags for this administration that while our overall trade deficit is slightly down, our trade deficit with China continues to explode," Senator Schumer said.”--AFP