US trade gap widens as exports fall
By Alan Rappeport in New York
Copyright The Financial Times Limited 2010
Published: June 10 2010 14:40 | Last updated: June 10 2010 14:40
The US trade gap grew to its highest level in more than a year in April as the relative strength of the dollar and European debt woes slowed exports.
The trade deficit widened by 0.6 per cent to $40.3bn, according to the commerce department. That was the highest level since December 2008, but slightly narrower than economists had projected.
The US trade shortfall has grown by 48.4 per cent since hitting a low last June of $27bn.
In April, exports slid by 0.7 per cent to $148.8bn. That outpaced the decline in imports, which slipped by 0.41 per cent to $189.1bn.
Other countries reduced purchases of US consumer goods, food and beverages and industrial supplies. In the US, demand for consumer goods declined along with appetite for cars, parts and engines.
The US trade deficit with China, its biggest and most politically sensitive trade partner, grew in April by 14.2 per cent to $19.3bn. That came as China reported that its May exports had soared by 48.5 per cent.
Alan Ruskin, a strategist at RBS Securities, said that China’s “bulging” exports and the swollen bilateral trade deficit would probably provoke the US to put more pressure on China to pursue a more flexible exchange rate policy.
US deficits with Europe, Mexico and Japan eased in April.
Meanwhile, the US labour market offered a small glimmer of hope as fresh claims for jobless benefits declined by 3,000 to 456,000 last week, according to the labour department.
The number of Americans continuing to claim jobless benefits also declined, falling by 255,000 to 4.46m.
Although the declines are welcome, economists contend that new claims for unemployment insurance need to fall to the low 400,000s before the economy can sustain job creation.
“With claims stranded at this level, big private sector payroll gains are just not on the agenda,” said Ian Shepherdson, chief US economist at High Frequency Economics.
Thursday’s figures come almost a week after a disappointing labour department report revealed that the US had added just 41,000 private sector jobs, bringing the unemployment rate down to 9.7 per cent.