US trade gap widens as oil cost boosts imports to record

By Shobhana Chandra  |   2008-6-11  |     NEWSPAPER EDITION

THE United States trade deficit widened in April as the surging cost of oil boosted imports to a record, overshadowing the biggest gain in exports in four years.

The gap grew 7.8 percent to US$60.9 billion, more than forecast and the highest level since March 2007, the Commerce Department said yesterday in Washington. Excluding petroleum, the shortfall was little changed.

Rising fuel prices will keep pushing imports higher, while a weaker US dollar stimulates export demand by making American-made goods more competitive. Sales abroad are one of the few bright spots in the economy as the two-year housing slump and slowdown in consumer spending cause growth to almost stall.

"Rising imports are largely a reflection of oil and higher prices," Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado, said before the report. "We're still seeing strong demand for exports. Trade improvements will definitely add to growth through most of 2008 and into 2009."

The trade gap was forecast to widen to US$60 billion, according to the median estimate in a Bloomberg News survey of 70 economists. Deficit projections ranged from US$56 billion to US$63 billion. The March shortfall was revised down to US$56.5 billion from a previously reported US$58.2 billion.

After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit shrank to US$46.9 billion, the lowest since August 2003. Combined with the smaller gap now reported for March, the figures may boost forecasts for economic growth.

Imports grew 4.5 percent in April, the biggest gain since November 2002, to a record US$216.4 billion. The average price of imported petroleum, at US$96.81 a barrel, and the total amount of the fuel bought, were both the highest ever.

Americans bought more cars, food, electronics and toys from overseas.

Exports rose 3.3 percent, the most since February 2004, to a record US$155.5 billion, led by sales of commercial aircraft, autos and agricultural machinery.

Boeing Co says its growth of as much as 5 percent a year will be from outside the US, officials have said.