Trade Deficit in U.S. Unexpectedly Widens to $53.1 Billion

The U.S. trade deficit unexpectedly increased in June to the highest level since October 2008 as a slump in exports exceeded a decline in shipments from overseas.

The gap widened 4.4 percent to $53.1 billion from $50.8 billion in the prior month, Commerce Department figures showed today in Washington. The deficit exceeded all estimates in a Bloomberg News survey of economists in which the median was $48 billion. Exports declined the most since January 2009.

U.S. shipments of capital equipment and industrial supplies fell in June, which may reflect the start of a cooling in the global economy. Some companies like Caterpillar Inc. (CAT) remain optimistic that demand for American-made goods will be sustained, helped in part by a weaker dollar.

“The real weakness was in exports and that’s consistent with slower growth in the rest of the world,” said Jay Bryson, a global economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “The contribution of exports is going to be a little more shaky” in terms of growth, he said.

Deficit estimates of 74 economists surveyed by Bloomberg ranged from $42.5 billion to $51 billion. The Commerce Department revised the May shortfall from a previously reported $50.2 billion.

America’s deficits with China and the European Union widened in June at the same time Japan’s shipments of automobiles into the U.S. picked up.

The number of Americans filing first-time claims for jobless benefits declined last week to a four-month low of 395,000 from 400,000 in the prior period, the Labor Department said today.

Stock-Index Futures

Stocks rose after the reports. The Standard & Poor’s 500 Index climbed 1.1 percent to 1,133.2 at 10 a.m. in New York. Treasury securities fell, pushing up the yield on the benchmark 10-year note to 2.18 percent from 2.11 percent late yesterday.

After eliminating the influence of prices, which renders the figures used to calculate gross domestic product, the trade deficit rose to $50.9 billion from $47.9 billion. The second- quarter deficit average of $47.5 billion compares with $50.3 billion in the first three months of the year.

A preliminary Commerce Department report last month estimated trade contributed 0.6 percentage point to growth in the second quarter. Trade detracted 0.3 percentage point in the first three months of the year.

The wider deficit in June “is going to lead to about a half percentage-point downgrade to GDP growth in the second quarter,” Bryson said.

Imports dropped 0.8 percent to $223.9 billion in June. Purchases of foods and feeds from overseas reached a record in June, the report showed.

Cheaper Oil

A barrel of crude oil cost an average $106 in June, down from $108.7 in May, helping to reduce the import bill, Commerce Department figures showed. Excluding petroleum, the trade gap widened to $23.5 billion from $20.2 billion in May.

U.S. exports decreased 2.3 percent to $170.9 billion as shipments of goods declined more than services.

Goods shipped into the U.S. from Japan appeared to be recovering from supply constraints related to the earthquake and tsunami in March.

Imports from Japan rose 14 percent to $9.5 billion, widening the U.S. trade gap with the Asian nation to $4 billion from $2.6 billion. Shipments of automobiles from Japan rose to $2.7 billion in June from $2 billion.

Auto Sales

The disruption in parts shipments and the resulting slowdown in production are still depressing sales. Japan’s Honda Motor Co. and Toyota Motor Corp. led declines in U.S. July sales for Asian brands amid inventory constraints. Deliveries fell 28 percent for Honda and 23 percent for Toyota, the largest Asia- based automaker, from a year earlier.

The trade gap with China climbed to $26.7 billion, the widest since September, from $25 billion in May. Imports from China rose to the highest level since November.

The U.S. deficit with European Union nations rose to $9.8 billion, the highest since July 2008.

Slower job and income growth has restrained the biggest part of the U.S. economy, limiting demand for imports. Consumer spending fell in June for the first time in two years, Commerce Department data showed last week. Manufacturing expanded in July at the slowest pace in two years, the Institute for Supply Management said last week.

The economy grew at a 1.3 percent pace in the second quarter following revised growth of 0.4 percent in the first three months of the year that was less than previously estimated, the Commerce Department reported last month.

Federal Reserve

Federal Reserve policy makers this week said economic growth this year “has been considerably slower” than they had expected. The “temporary factors” they had previously cited for the slowdown, including supply chain disruptions, “appear to account for only some of the recent weakness in economic activity,” they said.

Manufacturers have enjoyed stronger demand from emerging nations such as China and Brazil before recent concerns about the European and U.S. economies raised the risk of a global slowdown.

Peoria, Illinois-based Caterpillar, the world’s largest construction- and mining-equipment maker, posted increased profits and sales in the second quarter, largely due to growth overseas, the company said July 22.

“China is doing a good job of balancing growth and inflation, and our expectations for China remain positive,” Chief Executive Officer Douglas Oberhelman said in the statement. “While we’ve seen some softening of growth in China, dealer deliveries to end users were up in the second quarter of 2011 compared with the second quarter of last year.”

The drop in the value of the dollar is one reason for optimism. A weaker dollar benefits American companies by making their products more attractive to buyers overseas. The dollar dropped 7.8 percent in the 12 months ended in July against a weighted basket of currencies from the country’s biggest trading partners.

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net; Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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