U.S. Imports Rose as Trade Deficit Widened in June

U.S. Imports Rose as Trade Deficit Widened in June
By JACK HEALY
Copyright by The New York Times
Published: August 12, 2009
http://www.nytimes.com/2009/08/13/business/13econ.html?ref=global-home


The gap between what the United States imports and what it exports widened in June, the government reported on Wednesday.

But economists saw some good news in the larger deficit, which had narrowed in recent months as the volume of trade between the United States and the rest of the world dwindled. The value of imports rose in June for the first time in nearly a year, and American exports increased from a month earlier, though not as much as imports.

The $3.5 billion increase in imports primarily reflected rising costs of crude oil, fuel oils and other petroleum-based goods, but businesses and consumers in the United States were also buying more food and beverages from abroad, and demand for foreign-made cars rose.

“Growth in the rest of the world is picking up, and that’s critical to emerge from the worst recession since the Great Depression,” said Joseph Brusuelas, director at Moody’s Economy.com.

In July, the number of overseas manufacturers sending shipments to the United States increased by 7 percent, according to the private firm Panjiva, which tracks shipping. Still, the number of shipments from overseas was down 10 percent from last July.

Over all, the trade deficit widened to $27 billion in June from $26 billion in May, according to the Commerce Department. The United States imported a total of $152.8 billion in goods and services, and sent $125.8 billion to the rest of the world.

Economists had expected the trade gap to widen to $28.5 billion for the month.

The figures suggested the worst was over for the global economy, economists said, and that demand for American-made goods was picking up. The United States sent more capital goods like civilian aircraft, semiconductors and industrial machines to other countries, and also exported more industrial supplies.

“That’s what gives me a little bit more optimism here,” Mr. Brusuelas said. “That’s what we do — Boeing, semiconductors and telecom equipment. The only thing missing was computer accessories.”

Exports of computer accessories dropped $32 million for the month.

Last July, the trade deficit exploded to $65 billion as crude oil prices soared to $145 a barrel. But the gap between imports and exports shrank as the global financial crisis rattled economies around the world, sending oil prices to nearly $30 a barrel and reducing consumer and business demand in the United States.

Exports have picked up for two months since touching bottom in April, and economists said the figures on Wednesday would probably presage growth during the third quarter, as businesses restart production and restock their depleted inventories. The economy shrank at an annual pace of 1 percent in the second quarter, and most economists expect it to be flat or grow slowly in the third quarter.

In June, the United States trade deficit with China grew to $18.4 billion while the deficit with oil-producing OPEC countries grew to $5.9 billion.

“Exports should continue to grow in the months ahead because global economic activity is turning positive,” Abiel Reinhart, an economist at JPMorgan Chase, wrote in a research note. “Nonpetroleum imports should also start to recover soon because of rising domestic demand.”