WASHINGTON, June 11 (AP): The trade deficit soared to the highest level in more than a year as an improvement in exports was swamped by record-high levels of imported crude oil. The deficit with China also rose sharply.
The gap between what the nation imports and what it sells abroad rose by 7.8 per cent in April to $60.9 billion, the commerce department reported Tuesday. It was the largest imbalance since March 2007.
The higher deficit was driven by a $4.3 billion increase in crude oil imports, which jumped to a record $29.3 billion in April, as the average per-barrel price rose to an all-time high of $96.81.
If the price of crude had instead been at $60 per barrel, about where it was a year ago, the trade deficit would have been $11 billion lower in April. Analysts cautioned the deficit will widen further in coming months, given that oil is now trading above $130 per barrel.
US export sales totalled $155.5 billion in April, up 3.3 per cent to an all-time high, reflecting big gains in sales of commercial aircraft, farm machinery, medical equipment and computers. But this increase was swamped by a 4.5 per cent rise in imports, which also set a record at $216.4 billion. In addition to oil, there were huge gains in imports of autos and consumer goods.
On Wall Street, stocks finished a lacklustre day as a drop in oil prices failed to keep investors from worrying about the adverse effects of high energy costs. The Dow Jones industrial average edged up 9.44 points to close at 12,289.76.
The trade deficit through the first four months of this year is running at an annual rate of $707.5 billion, up slightly from last year's deficit of $700.3 billion, which was a 7-per cent drop from 2006. The improvement last year came after the trade imbalance set records for five consecutive years.
Many economists are looking for the deficit to shrink again this year, reflecting a significant economic slowdown in the United States which is cutting into demand for imports and the weak dollar, which has helped to boost US exports.
Exports are the standout performer at the moment in an economy beset by a prolonged slump in housing, a severe credit crunch and rising unemployment.
Nigel Gault, chief US economist for Global Insight, predicted foreign trade would add about 1 percentage point to economic growth in the current quarter, helping to keep overall growth slightly above zero and avoiding a negative reading that could be a sign of recession.
The politically sensitive deficit with China shot up by 25.9 per cent in April to $20.2 billion, the highest level in three months, reflecting higher imports of a wide range of Chinese products from toys and games to televisions, electrical appliances and clothing.
