Trade Gap Widens 10 Pct. to Record Level
>>Analysts worry that the ballooning current account deficit, which is the broadest measure of trade because it also includes investment flows, is at risk of a disorderly correction which could trigger a slide in the value of the dollar.<<
October 18, 2002 09:23 AM ET
By Doug Palmer
WASHINGTON (Reuters) - The U.S. trade gap jumped nearly 10 percent in August to a record $38.46 billion, as exports fell for the first time in six months and demand for foreign consumer goods pushed imports to their highest level since March 2001, the government said on Friday.
The trade gap exceeded the average forecast of $35.58 billion made by analysts surveyed before the Commerce Department report. Excluding the U.S. surplus for services trade, the deficit for goods was $42.27 billion, also a record.
The sharp increase in the deficit renewed analyst concerns that it could eventually trigger a sharp drop in the dollar, although there was little initial reaction in currency markets as traders focused on stocks instead.
"It looks like funding the current account may become a bigger issue," Eric Nickerson, chief currency strategist at Bank of America in New York.
Analysts worry that the ballooning current account deficit, which is the broadest measure of trade because it also includes investment flows, is at risk of a disorderly correction which could trigger a slide in the value of the dollar.
However, U.S. officials have repeatedly said they are not worried about the current account deficit, calling it a sign of the United States' economic strength and its attractiveness to foreign investors.
U.S. imports increased a healthy 2 percent in August to $120.31 billion. Imports of consumer goods such as pharmaceuticals, televisions, furniture and household appliances were a record $26.66 billion. Imports of services were also a record at $20.06 billion.
The monthly bill for oil imports increased to $7.33 billion in August, from $6.82 billion in July, as average prices rose to $24.57 per barrel -- the highest level since the December 2000 level of $26.40.
U.S. exports fell to $81.86 billion, down 1.3 percent from July, as the major export categories of capital goods, foods, feeds and beverage, autos and auto parts and consumer goods all showed declines.
Jay Bryson, global economist with Wachovia Bank in Charlotte, North Carolina, said the jump in the trade deficit was a "surprise" after its narrowing in July.
"It appeared that exports of civilian aircraft were down $1 billion, after being up $1 billion the month before," Bryson said. "Crude oil imports were up, which is not a surprise because oil prices were rising."
"The way to look at these data is to take July and August together. That way, the average is nearly $37 billion per month. That is high, but when you smooth out the monthly volatility, August's numbers no longer look like a blowout."
The United States bilateral trade deficit with two of its largest trading partners, China and Mexico, also set records in August. The trade gap with Mexico increased to $3.48 billion, from $3.37 billion in July. The deficit with China rose to $10.86 billion, from $9.34 billion.
The trade deficit with OPEC countries increased sharply in August to $3.68 billion as the average price for a barrel of oil hit $24.57, the highest since the December 2000 level of $26.40.
reuters.com |
