The U.S. trade deficit widened to another record in June, fueled by a sharp rise in a wide range of imports that outstripped a modest export jump, the Commerce Department reported Thursday.
The U.S. trade deficit in goods and services ballooned to $24.6 billion, a rise of 16 percent from May. In the first six months of the year, the deficit totaled $118.1 billion, exceeding the gap for the first six months of 1998 by more than half.
The June figure exceeded most economists' expectations. A survey of economists by CBS.MarketWatch.com found an average estimate calling for a $20 billion deficit.
The report reflected strong consumer demand, with imports surging to a record level. Imports totaled a record $103 billion, reflecting increased demand for a wide range of goods ranging from big-ticket capital items to automotive vehicles and accessories and consumer goods, which all posted records. Imports of foods, feeds and beverages also hit an all-time high.
In the capital goods area, the report showed a strong surge in imports of telecommunications equipment, which rose 11 percent to $2.2 billion. Computer imports jumped 23 percent to $995 million.
Unlike many previous months, however, the gap showed U.S. exporters rebounding somewhat from recent weakness.
The widening trade gap has been a political headache for the Clinton Administration, with past widening stemming in large part from a sharp fall in exports in the wake of the Asian financial crisis. The agricultural sector has been particularly hard hit by the subsequent sharp drop in farm commodity prices.
Steel producers and some other industries were also pressured by a sharp rise in cheap imports. Meanwhile, the bulk of the U.S. economy continued to steam ahead at a robust pace.
The surge in imports more than offset a rebound in exports, which totaled $56.5 billion -- the highest level since December 1998. Of note, exports of automotive vehicles, parts and engines totaled $6.5 billion, the highest since July 1997.
Stronger oil prices remained a factor in the widening deficit, with the petroleum deficit of $5.1 billion the highest since November 1997. The Commerce Department said June imports of crude petroleum were the highest since November 1997.
Meanwhile the trade deficit with Pacific Rim countries continued to widen. On a non-seasonally adjusted basis, the trade gap with China increased 7 percent to $5.7 billion, while the gap with Japan rose 19 percent to $6.3 billion.
The Commerce Department noted that exports to China of $1.5 billion were the highest since October 1998. Imports from China rose 12 percent to $7.1 billion.
The deficit with other major trading partners also widened. The gap with Canada rose by more than a third to $2.8 billion. The gap with Western Europe rose 38 percent to $4.9 billion.
Written By William L. Watts, CBS MarketWatch