WASHINGTON, Aug. 13 (UPI) -- The nation's trade deficit surged in June to a record $55.8 billion as imports of crude oil surged and a slowing growth in Japan and Europe curbed export demand.
The Commerce Department said the June U.S. gap in goods and services trade followed a $46.9 billion shortfall in May.
U.S. exports had the biggest decline since September 2000, suggesting that other economies aren't expanding as rapidly, the Commerce Department's report showed. Economists on Wall Street had expected the gap to widen to $47 billion.
International trade measures the difference between imports and exports of both tangible goods and services. The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade.
Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. Furthermore, the data can directly impact all the financial markets, but especially the foreign exchange value of the dollar. Imports indicate demand for foreign goods and services here in the U.S. exports show the demand for U.S. goods in overseas countries.
The report showed U.S. exports dropped to $92.8 billion in June. Foreign businesses bought $26.2 billion worth of capital goods from the U.S., an 8.9 percent decline from the previous month. Imports rose to a record $148.6 billion, led by demand for industrial supplies and materials.
The value of U.S. oil imports rose in June to $15.3 billion from $13 billion the month before. Non-petroleum imports rose to $108.9 billion. Imports of autos and parts fell 3.5 percent in June to $18.7 billion. Those of consumer goods rose 0.4 percent.
Imports of capital goods, excluding cars, rose 5.3 percent to $29.5 billion. Imports of industrial supplies, including chemicals and metals as well as oil, surged 10 percent to $35.2 billion.
By region, the Commerce Department said that the trade deficit with Japan widened to $6.3 billion from $5.5 billion. The gap with China widened to $14.2 billion from $12.1 billion. The deficit with Canada, the largest U.S. trading partner, widened to $6.6 billion from $4.8 billion. The shortfall with Western Europe widened to $10.7 billion in June from $8.2 billion in May.
Federal Reserve policymakers said this week after raising interest rates that ``a substantial rise in energy prices'' was restraining the economy. Energy prices were 11.3 percent higher in July than the same month last year, have chipped away at incomes and caused spending on other goods and services to slow. Crude oil futures rose to a record $45.80 a barrel on the New York Mercantile Exchange worries that supplies from Iraq, Russia or Venezuela may be disrupted.
