The United States' trade deficit increased sharply in June as surging oil prices pushed the cost of petroleum imports to an all-time high. The politically sensitive deficit with China also set a record.
The Commerce Department reported that the imbalance between what the United States sells abroad and what it imports rose to $58.8 billion in June, an increase of 6.1 percent from the May deficit of $55.4 billion.
So far this year, the trade deficit is running at an annual rate of $686 billion, 11 percent higher than last year's record of $617 billion. The trade performance has presented President Bush with a political headache as critics have charged that the soaring imbalance represents the failure of the administration's trade policies.
The June deficit came as U.S. exports of goods and services rose by $52 million, to a record of $106.8 billion, reflecting higher sales of telecommunications equipment, aircraft engines and chemical fertilizers.
Imports, however, rose a much larger $3.44 billion to also set a record at $165.6 billion, reflecting an increase in both the price and volume of petroleum shipments and higher imports of toys, clothing and other consumer goods.
Analysts predicted that the deficit will continue to worsen in coming months, reflecting in part the fact that the United States is growing faster than many other countries. They also view the dollar as still overvalued, making imports cheaper for Americans and U.S. products more expensive for foreigners.
"The U.S. economy is simply stronger than that of most of our trading partners, and modest currency movements have proven insufficient to remedy the balance," said Stephen Stanley, chief economist at RBS Greenwich Capital.
More than half of the trade deterioration in June reflected the nation's surging foreign oil bill, which hit a record high of $19.9 billion. The average price of a barrel of imported crude oil jumped to $44.40 in June, the second highest monthly average for imports on record, exceeded only by a $44.76 average in April.
The United States' deficit with China hit a record at $17.6 billion in June, surpassing the old mark of $16.8 billion set last October. Last year, the deficit with China hit $162 billion, the highest imbalance ever recorded with any country, but this year's imbalance is running 32 percent above the 2004 pace.
Much of the deterioration reflects a flood of clothing and textile shipments from China since Jan. 1, when global quotas expired. Responding to pleas of U.S. textile manufacturers about job losses and plant closings, the administration has moved to again impose quotas in several clothing categories.
The administration also announced on Thursday that it would begin negotiations next week aimed at reaching agreement with China on a comprehensive cap on Chinese clothing and textile imports.