Weakening exports and surging imports pushed the US trade deficit to a record in June, according to data on Friday that led to warnings that growth estimates could be revised lower.
The Commerce Department reported that the gap widened by $8.9bn (€7.3bn, £4.9bn) a record shift for a single month to $55.8bn as exports slumped to their lowest in nearly three years while imports pushed to a new record high, helped by a jump in the volume of oil imports.
“It was a perfect storm everything that could happen to push the deficit wider, did,” said Henry Willmore, US economist at Barclays Capital. Imports jumped 3.3 per cent in June to $148.6bn while exports fell by 4.3 per cent to $92.8bn the biggest one-month drop since September 2001. Economists said a fall-off in capital goods exports large items such as aircraft and supercomputers may have been responsible for the decline and could rebound next month.
“If two or three items that usually get shipped got delayed, it can have a marked effect on the figures,” added Mr Willmore.
Economists expected the deficit in July to have narrowed from the June record, but warned the trend towards wider trade gaps was still in place.
“It should be clear that the US is experiencing a real and accelerating deterioration in its international accounts,” said Rebecca Patterson, strategist at JP Morgan, who described the trade deficit as an “Achilles heel” for the dollar. The US currency fell to three-week lows against the euro at $1.235 after the report as traders worried that the widening gap would add to US dependence on foreign inflows into its financial markets to balance payments.
“Even if the deficit does narrow, we could still be looking at a gap around $50bn for the next few months. This is going to a be a bigger drag going into the third quarter than we had expected,” said Ian Morris, US economist at HSBC.
The report was also expected to prompt downwards revisions to second-quarter growth estimates from the original 3 per cent estimate to about 2.5 per cent.
Interest rate futures contracts rose, implying markets were pricing in slightly less chance of rate rises from the Fed than before the data.
Rising oil costs were a factor in the trade data and two other reports released yesterday. Oil accounted for $2.5bn of the deficit increase. Since June, when the average was $33.76 a barrel, prices have risen to new records above $45 in New York.
A fall in consumer confidence, as measured by the University of Michigan, was partially attributed to concerns about higher energy costs, which also added to producer inflation data. Producer price inflation rose 0.1 per cent last month, or 4 per cent year on year. Excluding volatile food and energy costs, prices rose by an annual 1.7 per cent.
“This suggests the price pressures that have been building are not going to go away,” said Mr Willmore.
