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Economy in Brief

Record U.S. Foreign Trade Deficit Swelled By Higher Oil Prices
by Tom Moeller September 12, 2006

Higher oil prices helped boost the U.S. foreign trade deficit to a new record in July of $68.0B from an unrevised $64.8 B in June. Consensus expectations had been for a somewhat shallower deficit of $65.5B.

Imports of goods & services jumped 1.0% m/m driven higher by a 1.4% surge in goods imports. That gain was goosed by a 4.8% (36.5% y/y) spike in the value of petroleum imports as the price of imported crude oil rose 4.5% to $64.84 per bbl. (32.1% y/y). However, the quantity of crude petroleum imports fell 5.9% (+3.0% y/y).

Imports of nonpetroleum products rose 0.6% (11.1% y/y) as imports of capital goods increased 2.3% (11.8% y/y) but nonauto consumer goods imports rose just 0.5% (10.4% y/y). Automotive imports also fell 5.3% (+6.0% y/y) while imports of foods, feeds & beverages jumped 3.9% (11.1% y/y).

Total exports fell 1.1% after a 2.3% surge in June and a like gain in May. A 3.7% decline in capital goods exports (+11.1% y/y) pulled the July total lower along with a 0.5% (+16.8% y/y) slip in foods, feeds & beverages. Nearly half of the July decline in capital goods exports was due to lower civilian aircraft (-0.8% y/y). Exports of nonauto consumer goods posted another strong gain and rose 1.5% (14.3% y/y).

Services exports in July rose 0.1% (8.3% y/y) as private travel services exports rose just 0.5% (5.5% y/y). Imports of services declined 0.6% (+10.5% y/y).

The U.S. trade deficit in goods with China improved slightly to $19.6B in July ($201.5B in 2005).

Foreign Trade  July June Y/Y 2005 2004 2003
U.S. Trade Deficit $68.0B $64.8B $58.1B
(7/05)
$716.7B $611.3B $494.9B
Exports - Goods & Services -1.1% 2.3% 12.6% 10.7% 13.4% 4.2%
Imports - Goods & Services 1.0% 1.1% 12.2% 13.0% 16.7% 8.3%
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