The U.S. trade gap exploded to a record US$55.8 billion in June, the sharpest deterioration in more than five years, a government report showed Friday. The shortfall mushroomed 19.1 percent, the biggest one-month swelling since February 1999, to a seasonally adjusted US$55.8 billion, far beyond Wall Street expectations.
“It is just a phenomenal deterioration for one month in the trade balance,” said BMO Financial Group senior economist Sal Guatieri.
Exports crumbled US$4.2 billion, or 4.3 percent to US$92.8 billion, the steepest decline since the September 11, 2001 terrorist attacks, the Commerce Department said.
Foreign demand weakened for U.S.-made capital goods, industrial supplies, foods, motor vehicles, and consumer goods.
“There was broadbased weakness in export growth, which is a little disconcerting because it could mean that because of higher energy costs the global economy has softened a little,” Guatieri said.
Imports, however, climbed 4.7 billion dollars, or 3.3 percent, to US$148.6 billion.
Americans snapped up foreign-made industrial supplies, capital goods, and consumer items, showing strong underlying U.S. domestic demand, especially among businesses, he said.
The dollar slumped on the news, tumbling to 110.605 yen from 111.715 just before the release. The euro took immediate advantage, rising to 1.2331 dollars from 1.2224.
A breakdown of the raw figures showed:
— The deficit with China expanded 17 percent from the previous month to a record US$14.2 billion.
— The U.S. deficit with Japan widened 14 percent to US$6.3 billion.
— With the European Union, the trade gap grew 35 percent to US$10.6 billion.
— The deficit with the Organization of Petroleum Exporting Countries (OPEC) grew 10 percent to a record US$6.2 billion.
The staggering U.S. deficit could force the government to downgrade its initial estimate of 3.0-percent economic growth in the second quarter of the year, Guatieri, said.
But the news was unlikely to sway the Federal Reserve from a program of raising the short-term interest rate.