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August 14, 2004, Saturday BUSINESS/FINANCIAL DESK Trade Deficit, $55.8 Billion, Sets Record(NYT) 713 wordsThe United States trade deficit ballooned in June to a record $55.8 billion as imports of crude oil surged and slowing growth in Japan and Europe curbed export demand.The gap in goods and services trade follows a $46.9 billion shortfall in May, the Commerce Department said. Producer prices in July rose 0.1 percent, less than forecast and a sign of the difficulties manufacturers are having passing along the surge in energy costs, Labor Department figures showed. Also, consumer confidence unexpectedly fell this month, the University of Michigan said. ''The economy has got a lot of basic thrust to it, but these current energy prices have created some headwinds for us,'' Treasury Secretary John W. Snow said in an interview in Boca Raton, Fla. Federal Reserve policy makers said this week after raising interest rates that ''a substantial rise in energy prices'' was restraining the economy. Economists at Lehman Brothers, Morgan Stanley and HSBC Securities USA were among those cutting second-quarter growth estimates after the trade report. Treasury prices rose and the dollar fell. ''This poses some significant worries for the economic outlook,'' said Joseph Abate, a senior economist at Lehman Brothers in New York. The widening gap ''suggests that demand is being met from foreign rather than domestic production and employment.'' Energy prices, which were 11.3 percent higher in July than in the month last year, have chipped away at incomes and have caused spending on other goods and services to slow. Crude oil futures rose to $46.58 a barrel on the New York Mercantile Exchange amid worries that supplies from Iraq, Russia or Venezuela might be disrupted. United States exports had the biggest decline since September 2000, the Commerce Department's report showed. ''We expect the decline in exports to be reversed in July since exports had been on a strongly rising trend over the prior 3 and 12 months,'' said John Ryding, chief United States economist at Bear, Stearns & Company in New York. The trade deficit is the amount by which imports exceed exports. Economists had expected the gap to widen to $47 billion, the median of 65 forecasts in a Bloomberg News survey. The economy grew at a 3 percent annual rate from April through June, the slowest in more than a year, as rising energy prices led to the weakest pace of consumer spending since 2001, the Commerce Department said last month. Exports dropped to $92.8 billion in June. Foreign businesses bought $26.2 billion worth of capital goods from the United States, 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 Commerce Department said. The value of United States oil imports rose in June to $15.3 billion from $13 billion the month before. Nonpetroleum imports rose to $108.9 billion. Imports of autos and parts fell 3.5 percent in June, to $18.7 billion. Imports 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, metals, and oil, surged 10 percent, to $35.2 billion. The Labor Department said energy prices increased 2.3 percent in July alone, the biggest rise since January. Gasoline prices increased 5.4 percent and natural gas costs rose 1.2 percent. Those prices are easily passed to consumers, who were less optimistic this month than in July. The University of Michigan's survey showed its preliminary index of confidence fell to 94 from 96.7 in July. The expectations index, which measures optimism about the next one to five years, declined to 84.7 from 91.2.
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Chart: ''Balance of Trade'' |