US July trade deficit swells on oil, Chinese imports

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WASHINGTON, Sept 13 (AFP): The US trade deficit rose sharply to 62.2 billion dollars in July, the largest gap in more than a year, on record high oil prices and surging Chinese imports, government data showed yesterday.
The July trade gap was wider than the consensus forecast for an increase to 58.0 billion dollars. It was the largest shortfall since March 2007 and followed two consecutive months of shrinking deficits.
The deficit rose nearly six per cent from a June deficit of 58.8 billion dollars, revised sharply higher from the prior estimate of 56.8 billion.
Analysts said the July data indicated international trade likely will continue to underpin growth in the US economy, which accelerated to a 3.3 per cent pace in the second quarter, as a weak dollar bolstered exports, though the dollar has recently strengthened.
"Trade volumes suggest that trade will add at least 1.0 per centage point to third-quarter growth, a solid contribution-albeit less dramatic than the 3.1- per centage-point contribution in the second quarter," said Nigel Gault, analyst at Global Insight.
July exports rose 5.4 billion dollars to a total 168.1 billion dollars and imports were up 8.7 billion dollars to 230.3 billion, the department said.
On a 12-month basis, the July trade deficit was 4.9 billion dollars higher than a year ago.
Peter Morici, a University of Maryland economist, highlighted the huge trade deficit's weight on US gross domestic product (GDP) growth.
"Money spent on Middle East oil, Chinese televisions and coffee markers, Japanese and Korean cars can't be spent on US made goods and services, unless offset by a comparable amount of exports," Morici said.
"At about 5.2 per cent of GDP, the trade deficit is a significant drag on economic growth and destroys millions of high-paying US jobs."