US trade def icit rises in Au­gust

Jamaica Gleaner - - BUSINESS -

THE UNITED States trade deficit rose in Au­gust as a flood of im­ports off­set the best show­ing for ex­ports in 13 months. The po­lit­i­cally sen­si­tive deficit with China rose to the high­est level in 11 months.

The trade deficit in­creased three per cent to US$40.7 bil­lion, up from a gap of US$39.5 bil­lion in July, the US Com­merce De­part­ment re­ported on Wed­nes­day.

Im­ports jumped 1.2 per cent to US$228.6 bil­lion, re­flect­ing big in­creases in ship­ments of for­eign oil, au­tos and com­mer­cial air­craft. Ex­ports were up 0.8 per cent to US$187.9 bil­lion, the fourth straight monthly in­crease and the high­est level in 13 months.

An­a­lysts are hope­ful that ex­port sales will pick up af­ter a rough two years when Amer­i­can pro­duc­ers had to bat­tle a ris­ing dol­lar that made their prod­ucts costlier over­seas.

“Ex­ports are be­gin­ning to show signs of life as the drag from the dol­lar’s surge in 2014 and 2015 be­gins to fade,” said Paul Ash­worth, chief US econ­o­mist at Cap­i­tal Eco­nom­ics. He pre­dicted that the rise in ex­ports would con­trib­ute to over­all growth in the July-Sep­tem­ber quar­ter.

The deficit with China in­creased 3.5 per cent to US$33.9 bil­lion, the high­est level since Sep­tem­ber 2015. So far this year, Amer­ica’s deficit with China, the largest with any sin­gle coun­try, is run­ning 5.7 per cent be­low last year’s level.

The trade deficit is the dif­fer­ence be­tween what Amer­ica ex­ports for sale abroad and im­ports for con­sump­tion in the United States. So far this year, the deficit is run­ning 1.3 per cent lower than the same pe­riod last year. The deficit in goods and ser­vices to­talled US$500.4 bil­lion, trim­ming 0.6 per­cent­age point from over­all growth of 2.6 per cent in 2015.

Growth this year is ex­pected to be even slower given a weak start which has seen the econ­omy barely ex­pand­ing at an anaemic rate of 1 per cent, as mea­sured by the gross do­mes­tic prod­uct, in the first half of the year.

How­ever, an­a­lysts be­lieve growth will re­bound in the sec­ond half as con­tin­ued solid gains in em­ploy­ment help to boost con­sumer spend­ing. They are look­ing for a de­clin­ing trade deficit to help boost GDP growth to around 3 per cent in the July-Sep­tem­ber pe­riod.

For Au­gust, oil im­ports rose 2.2 per cent to US$12.9 bil­lion with the vol­ume of crude oil im­ports climb­ing to the high­est level since Jan­uary 2014. Im­ports of cap­i­tal goods rose 2.4 per cent, re­flect­ing in­creased for­eign pur­chases of civil­ian air­craft, telecom­mu­ni­ca­tions equip­ment and com­put­ers.

The rise in ex­ports re­flected an in­crease in US ship­ments of au­tos and med­i­cal equip­ment which off­set a drop in sales of Amer­i­can-made air­craft.

AP

In this Fe­bru­ary 29, 2016 file photo, John Jenk­ins watches from Jack Perry Memo­rial Park as the CMA CGM Ben­jamin Franklin con­tainer ship is towed to Seat­tle’s Ter­mi­nal 18. On Wed­nes­day, the Com­merce De­part­ment re­ported that the US trade gap widened in Au­gust.

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