U.S. Trade Gap, Budget Deficit Sharply Wider

“The June trade deficit rose to $49.9 billion from $42.0 billion, well above the consensus $42.1 billion,” said Ian Shepherdson, chief U.S. economist for High Frequency Economics Ltd., in Valhalla, New York, in an analyst note. “This is spectacularly terrible. All the damage is in the core numbers; the oil deficit dipped marginally. But goods imports excluding oil and aircraft jumped 4.5%, following a massive 6.4% leap in May.”

The $7.7 billion May to June deficit in exports of goods mainly reflected decreases in capital goods and industrial supplies and materials. More than half of the $5.4 billion increase in imports of goods reflected increases in consumer goods. Another big contributor to the rise in imports was automotive vehicles, parts, and engines.

The smaller services sector posted a $0.3 billion increase of exports, largely in travel and professional services, while imports increased $0.6 billion. The imports increase was mostly accounted for by increases in transportation and travel as well as royalties and license fees that included payments for rights related to the 2010 soccer World Cup.

Meanwhile, the U.S. government ran a budget deficit of $165 billion in July, according to the Treasury Department’s monthly statement. The deficit represents the 22nd month of consecutive budget shortfall, and the year-to-date deficit now stands at $1.17 trillion versus last year’s record 10-month deficit of $1.27 trillion. Government spending totaled $320.6 billion versus tax and other receipts of only $155.5 billion for July. This compares to $319.5 billion in spending and $320.6 billion in receipts for June.

Market consensus before the Treasury announcement was for a budget deficit of $170 billion.

Read a story about last month’s deficit numbers from the archives of InvestmentAdvisor.com.