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U.S. Trade Deficit Unexpectedly Widens in June to Record $24.6
Billion
The U.S. trade deficit in goods and services widened in June to a new high as consumer demand pulled in record imports while exports also rose. The deficit widened to $24.622 billion for the month from $21.169 billion in May, previously reported as $21.3 billion, Commerce Department figures showed. Analysts had expected a June deficit of $20.6 billion. The merchandise deficits with Japan and China both widened. The U.S. also posted in June its first trade shortfall with Central and South America in more than three years. The deficit with OPEC members increased as well. The overall trade deficit in goods and services is the highest on record, the figures showed. So far this year, imports are ahead of what they were the first half of 1998. Exports are still lower. While a sign of consumer demand, a stream of imports could put pressure on U.S. inflation if the dollar weakens further. Imports of goods and services rose 3.9 percent to a record $102.992 billion during June, led by computers, telecommunications equipment, autos, consumer goods and industrial supplies. From January to June, imports totaled $584.786 billion, compared with $543.019 billion in the first half of 1998. Exports rose 0.5 percent to $78.370 billion in June, as shipments of autos and parts increased. Exports of food and industrial supplies also rose. At $466.643 billion, exports for the first half of the year were lower than the $467.720 billion reported in January-June 1998. The merchandise deficit with Japan, the second biggest U.S. commercial partner behind Canada, widened to $6.278 billion in June. The trade deficit with China rose to $5.666 billion. Through the first six months of the year, the deficit totaled $118.143 billion. That's up from $75.299 billion during the first six months of last year - and leaves the deficit on course to top last year's annual record of $164 billion. That could spell trouble for U.S. companies, as foreign investors lose confidence in the ability of the U.S. economy to keep growing, said Russ Sheldon, chief economist at M CM Moneywatch in New York. ``We could see some extreme currency weakness,'' he said. Strong import demand also subtracts from domestic production, analysts said. Still, imports have acted ``as a safety valve'' against inflation, said Ken Mayland, chief economist at KeyCorp in Cleveland. If U.S. consumer demand had to be met solely by domestic producers, prices would accelerate because of the strain on factories and mills to accommodate demand. Auto imports increased in June, as strong consumer demand has kept sales of U.S. and imported vehicles moving. Just last month, Toyota Motor Corp. said its U.S. sales including the Lexus luxury line rose 14 percent in July to 139,483, for the second-best month ever. The merchandise deficit with Japan widened to $6.278 billion in June from $5.261 billion during May and $5.215 billion in June 1998. The deficit with China widened $5.666 billion in June from $5.253 billion during May and $4.738 billion in June 1998. The U.S. deficit with Latin America -- the first since April 1996 -- was $262 million, down from a surplus of $13 million in May. That compares with a surplus of $1.018 billion in June 1998, the Commerce Department said. The figures don't include Mexico. The trade deficit with members of the Organization of Petroleum Exporting Countries rose to $1.992 billion in June from $1.634 billion in May and $633 million in June 1998. The U.S. imports more than half its crude oil. World oil prices have surged almost 90 percent this year as producers made much of their promised production cuts, reducing a glut that pushed crude oil to a 12-year low last December. The deficit with Asia's newly industrialized countries rose to $2.402 billion in June. The deficit with Canada, the largest U.S. trading partner, rose to $2.799 billion. The deficit with Mexico rose to $2.462 billion. The deficit with Western Europe rose to $4.937 billion. |