WASHINGTON—The US trade deficit increased much more than expected in June amid falling exports, government data showed Thursday, signaling slowing global demand that could further unhinge the economy.
The Commerce Department said the international trade gap was a seasonally adjusted $53.1 billion, the widest shortfall in more than two and a half years.
That was much bigger than expected by most analysts, who penciled in an average estimate of $48 billion.
“With fiscal austerity taking hold across Europe and growth in Asia slowing – specifically in China – room for export growth is suddenly shrinking,” said Jeffrey Rosen, an economist at Briefing.com.
“Even a historically low dollar could not drive excess foreign demand,” he added.
For the second month in a row, the US trade deficit was the biggest since the $59.5 billion gap in October 2008. The department upwardly revised the May number to $50.8 billion.
Imports fell 0.8 percent from May, to $223.9 billion. The decrease was mainly due to a decline in prices for oil and commodities used in manufacturing, a sector that slowed in June.
The politically sensitive trade gap with China widened 6.8 percent to $26.66 billion.
But in a worrying development for US economic growth, exports fell for the second consecutive month in June, by 2.3 percent from May to $170.9 billion.
The hardest-hit goods exports were industrial supplies and materials; capital goods; and foods, feeds and beverages. Services exports were “virtually unchanged” from May to June, the Commerce Department said.
The surprising drop in exports could lead to a lower estimate for second-quarter growth in gross domestic product, the broad measure of the nation’s goods and services output.
The first estimate of GDP growth in the April-June period was a weaker than expected 1.3 percent rise from the same period in 2010.
“The wider-than-expected trade gap for June looks to subtract about 0.4 percentage points from the revision to second-quarter GDP,” John Ryding and Conrad DeQuadros, at RDQ Economics, said in a client note.
The Federal Reserve said Tuesday that it would maintain ultra-low interest rates for two more years to support the world’s largest economy, saying growth was slowing more than expected.
The decline in exports in June shook one of the pillars of the US economy’s struggle to recover from severe recession that officially ended two years earlier.
President Barack Obama has set a goal of doubling exports over five years, to 2015, in an attempt to jump-start the sluggish economy and fight high unemployment.
The US Labor Department separately reported Thursday that initial jobless claims fell last week for the third week running, but barely half of the nearly 14 million people unemployed were drawing unemployment benefits.
The Fed, in announcing support for the economy Tuesday, estimated the high unemployment rate – which stood at 9.1 percent in July – “will decline only gradually” amid increasing “downside risks” to the economy.