Washington, DC, October 12, 2006--The trade gap of goods and services set a new record high in August, driven up once again by a record price of crude oil, a government report showed Thursday.
The nation's trade deficit widened 2.7% to $69.9 billion from the previous record of $68.0 billion in July, the Commerce Department said.
The widening of the deficit surprised analysts. The consensus forecast of Wall Street economists had been for the deficit to narrow to $66.4 billion.
Economists had thought the July deficit was a temporary bulge.
The August trade data could force economists to trim their forecasts for third quarter gross domestic product, which have been coming down steadily to a rate below a 3.0% annual growth rate. The worsening trade deficit is a drag on economic growth.
The data should deflate optimism that the trade gap is leveling off this year. After seeming to run out of steam earlier this year, the trade deficit is now on pace to set a new record this year.
For the first eight months of the year, the trade gap is $522.8 billion, compared with $457 billion over the same period last year when the deficit reached a record annual level of $716.7 billion.
In August, both imports and exports increased to record levels, but imports slightly outpaced exports.
August imports rose 2.4% to $192.3 billion, while exports rose 2.3% to $122.4 billion.
Imports of goods alone rose 2.9% in August to $163.5 billion. The increase was not simply petroleum. The U.S. also imported a record amount of foods and beverages, capital goods and consumer goods in August.
Both imports of petroleum and non-petroleum goods hit record highs in the month.
Exports of goods alone rose 2.9% to $88.0 billion. The U.S. exported a record amount of food and beverages and consumer goods.
Exports got a boost from civilian aircraft, which rose 11% to $2.86 billion in August.
Oil accounts for almost 40% of the trade gap, according to economists at BNP Paribas.
The imported value of crude oil hit a record $22.7 billion in August, as the average price per barrel of crude oil reached a new record of $66.12.
The petroleum deficit widened 5.8% to a record $27.2 billion.
Crude spot prices have fallen back sharply in recent weeks, but import prices lag badly behind the spot and so "is unlikely to exert a huge impact on the deficit in the short term," said BNP Paribas.
The U.S. trade deficit with China hit a record high $22.0 billion in August, up from $19.6 billion in July and $18.5 billion one year ago. The U.S. imported a record $26.7 billion in goods from China.
The U.S. also set record monthly deficits with Mexico and the OPEC nations.
For the first eight months of the year, the deficit with China totaled $143.3 billion, up from $126.3 billion in the same period last year.
