US trade gaps widens in April as oil prices surge

ABS-CBN News

Posted at Jun 11 2008 12:51 AM | Updated as of Jun 11 2008 08:51 AM

Reuters

WASHINGTON - The US trade deficit widened more than expected in April as the price of imported oil hit a record, pushing overall imports to an all-time high, a Commerce Department report showed on Tuesday.

The monthly trade gap grew nearly 7.8 percent to $60.9 billion from a downwardly revised $56.5 billion in March. The gain was the biggest since September 2005, despite a healthy 3.3 percent rise in exports to a record $155.5 billion.

Wall Street analysts had forecast a smaller rise in the trade gap to $59.9 billion, from the previous March figure of $58.2 billion.

The trade data could boost estimates of first-quarter US economic growth, but weigh on the second quarter, one analyst said.

"We had a big downward revision in the March figure which is good for the first-quarter GDP, but the April number spells badly for the second quarter," said Lou Brien, market strategist at DRW Trading in Chicago.

Average prices for imported oil rose $6.96 per barrel in April, the second biggest increase on record. Imports from Saudi Arabia, Venezuela and other members of the Organization of Petroleum Exporting Countries totaled a record $20.9 billion.

Overall US imports of goods and services were a record $216.4 billion, and showed their biggest one-month gain since November 2002. Although oil accounted for much of the increase, imports of autos and capital goods bounced back from a drop in March.

US exports also rebounded to a record $155.5 billion in April after retreating slightly in March. The month-to-month rise was the biggest in more than four years.

The weak dollar has helped push US exports higher over the last several years, keeping the US economy afloat during a severe housing market downturn and liquidity crisis.

This week, China's ambassador to the World Trade Organization said the weak US dollar was hurting developing countries by fueling increases in oil and food prices and he called on Washington to take quick action to stabilize its currency.

That criticism follows years of US complaints that China maintains an artificially low currency exchange rate, giving Chinese companies a big price advantage in international trade.

Top level US and Chinese economic officials will discuss currency, trade and other bilateral economic issues in talks outside Washington next week.

The US trade gap with China increased nearly 26 percent in April to $20.2 billion, as imports from that country surged and US exports to China slumped.

Meanwhile, two reports suggested US retail sales picked up a bit in early June, but remained sluggish.

Redbook Research said its index of chain store sales for the week ending June 7 was up 2.1 percent over its year-ago level, a touch higher than in the prior week. Separately, the International Council of Shopping Centers said its chain store sales index moved up 1.8 percent year-on-year.

"Retailers said business picked up as widespread warmer temperatures appeared finally to shift consumers toward long-awaited seasonal purchasing," Redbook Research said.