The US trade deficit widened much more than expected in July as average oil prices jumped to a record $124.66 per barrel and the volume of crude oil imports grew to the highest in four years, a US Commerce Department report showed on Thursday.
-- Sharp oil price drop in August pulls down import prices
-- Jobless claims edge down, but overall trend weak
The monthly trade gap swelled to $62.2 billion, the largest since March 2007, from an upwardly revised estimate of $58.84 billion in June. Wall Street analysts had forecast the deficit to expand to $58.0 billion from the original June tally of $56.8 billion.
As crude oil prices surged in July, the volume of oil imports jumped 15 percent to 342 million barrels, the highest since June 2004 even though prices were almost double the average of last July. Total petroleum imports hit a record $51.4 billion, helping lift overall imports of goods and services 3.9 percent to a record $230.3 billion.
"The deficit increased quite a bit, but it is all in petroleum. There is a lagged effect from those price increases. We had a $6.3 billion jump in the cost of crude oil and that will certainly put a dent in your trade deficit," said Kevin Logan, senior US economist with Dresdner Kleinwort in New York.
A separate Labour Department report showed US import prices fell 3.7 percent in August, the first decline since December as petroleum prices dropped 12.8 percent. The August oil price drop was the steepest since April 2003.
Imports of autos and consumer goods declined slightly in July and two other categories - food, feeds and beverages and capital goods - rose only slightly in a sign that the weak US economy is crimping demand for foreign goods.
A second Labour Department report showed that the number of US workers filing new claims for jobless benefits declined by 6,000 last week. But the number of people remaining on benefit rolls after an initial week of aid shot up by 122,000 to 3.53 million in the week ended August 30, the latest period for which data is available.
Financial market traders mostly ignored the reports, focusing instead on the fate of the beleaguered financial services firm Lehman Brothers. "Everything is off Lehman. That's the focus today," said Dave Lutz, managing director at Stifel Nicolaus & Co in Baltimore. US Treasury prices added slightly to gains in early trading after the data and the US dollar extended its losses versus the yen.
Meanwhile, US retail sales excluding cars rose in August but high gasoline and food prices cut into spending on other goods and services, a private report on Thursday showed. Consumer spending without autos rose 0.4 percent last month on a seasonally adjusted basis, slowing from the 1 percent increase in July, said SpendingPulse, the retail data service of MasterCard Advisors, an arm of MasterCard World-wide.
Reflecting the larger role oil is playing in the trade deficit, the nonpetroleum deficit in July shrank to its lowest level since October 2002, while the petroleum deficit hit a record $43.4 billion. Exports of US goods and services increased 3.3 percent to a record $168.1 billion, with industrial supplies and materials, capital goods, autos and auto parts and consumer goods all setting individual records.
In line with the higher oil prices, the US trade deficit with Saudi Arabia and other members of the Organisation of Petroleum Export Countries was a record $24.2 billion. The trade gap with China widened 16.1 percent to $24.9 billion and remained slightly ahead of last year's record pace.
Comments
Comments are closed.