Propelled by a large jump in imports, the nation's merchandise trade deficit climbed to a record $7.1 billion in August, the government reported yesterday.
The deficit for last month reflected a 20.2 percent increase in imports and a drop of 2.9 percent in exports, the Commerce release said. The trade deficit measured $2.4 billion in July and $3.4 billion in June. All the figures are adjusted for seasonal variations.
Last month's increase in imports was spread across the board. Oil purchases rose by 8.6 percent to $6.23 billion in August, while manufactured imports climbed by an astonishing 28.5 percent from July to reach $14.7 billion, yesterday's report said. These imports had dropped in the prevous month.
Analysts said the August rise in imports could reflect in part a rise in demand in the economy. David Lund of the Commerce Department said, "the breadth of this increase [in imports] is suggestive of what you might expect if demand were firming."
However, other statistics have showed that output and employment remained very weak in August. "I think the import increase is temporary," Allen Sinai, of Data Resources Inc., said yesterday, explaining that "it came at about the time when the economy showed a little bit of resiliency," but since then the economy has declined again.
Another factor pushing up imports and depressing U.S. exports is the strength of the U.S. dollar on foreign exchanges. The strong dollar makes foreign imports cheaper to American customers, thus encouraging people here to buy goods from overseas, and raises the cost of U.S.-made goods sold overseas.
The financial crisis in Mexico has also had an impact on the U.S. trade figures. Mexican goods were much cheaper in August than previously, and so more were bought in the United States. Meanwhile, the shortage of dollars across the border in Mexico held down purchases of U.S. goods, the Commerce report showed.
Among the imported goods that increased last month were clothing, footwear, office machines, communications equipment, tires and paper. Imports of metal ores, scrap metal and iron and steel products declined.
Many of the main trading partners of the United States are in a recession, or growing only very slowly and this has also made it harder to sell U.S. goods abroad, analyst Michael Young of Chase Econometrics said yesterday. Many Latin American economies are cutting back imports, and Western Europe is flat or declining, he said.