MercoPress. South Atlantic News Agency

US trade deficit forecasted to exceed last year's record

Pushed by the high cost of crude oil imports, United States July trade deficit hit a new record of 68 billion US dollars according to the latest data.

The figure was up 5% on June's deficit, and the gap for 2006 as a whole is now set to exceed 2005's record 717 billion US dollars. While US exports of goods and services fell 1.1% to 120 billion in July, the Commerce Department said total imports rose 1% to 188 billion. Crude oil imports in July totalled 28.5 billion.

However despite the overall increase in the gap between US imports and exports, the politically sensitive deficit with China declined slightly in July to 19.6 billion. Nevertheless the deficit with China is still on track to exceed last year's 202 billion record level.

Wall Street brushed aside the worsening trade figures to focus instead on seven days of falling oil prices, a decline that has lowered worries about inflation and raised hopes of stronger economic growth in coming months.

Analysts said the deficit with China is likely to rise given that the Chinese reported on Monday that their trade surplus for August set a fourth straight monthly record.

The rising trade gap with China will put pressure on Treasury Secretary Henry Paulson, who leaves Thursday for an Asian trip that will take him to China for his first meetings with Chinese economic officials since he joined Bush's Cabinet in July.

The Bush administration is pushing China to move more quickly to let its currency rise in value against the dollar as a way to narrow the growing trade gap by making US exports cheaper in China and Chinese goods more expensive for U.S. consumers.