As exports fell, the trade deficit sharply grew in June to its widest since October 2008, the Commerce Department said on August 11. The international trade gap was a seasonally adjusted $53.1 billion, after an upwardly revised $50.8 billion in May.
The June trade deficit was far wider than expected by most analysts, who penciled in an average estimate of $48 billion due to slowing demand as the economy staggers.
Imports fell 0.8% from May, to $223.9 billion. The decrease was mainly due to a decline in prices for oil and commodities used in manufacturing, a sector that slowed in June.
But in a more worrying development for economic growth, exports fell for the second consecutive month in June, by 2.3% from May to $170.9 billion.
The sectors hardest hit by falling demand for U.S. goods were industrial supplies and materials; capital goods; and foods, feeds and beverages.
"A rising trade deficit is not the prescription for job creation in America," said Scott Paul, executive director of the Alliance for American Manufacturing. "The June trade deficit exceeded virtually every estimate and is further proof that our economy is falling behind."I'm particularly concerned by the rising trade deficit with China. Unless we achieve a major rebalancing with China, our manufacturing sector will continue to experience long-term challenges. China has taken sporadic baby steps to increase the value of the Yuan, when what we need is a revaluation of at least 30%. Unless the Obama Administration gets tougher with China, we'll continue to see high trade deficits and anemic job growth."
The unexpected drop in exports could lead to a lower estimate for second-quarter growth in gross domestic product, the broad measure of the nation's goods and services output. The first estimate of GDP growth in the April-June period was a weaker than expected 1.3% rise from the same period in 2010.
Copyright Agence France-Presse, 2011, IW Staff