Oil Prices Help Widen U.S. Trade Gap

The U.S. trade deficit widened to $24.4 billion as the price of foreign oil climbed to the highest level since early 1997. The deficit with China, meanwhile, reached $6.9 billion, the worst figure the U.S. has ever recorded with any country.

The Commerce Department report Thursday said that the September trade deficit was 3.7% larger than a revised $23.5 billion August imbalance.

But economists saw glimmers of hope in the figures. Depressed farm exports rebounded to their highest level in nearly two years, and the surge in imports other than oil slowed considerably.

“Although still at very high levels, for the first time this year import growth actually stopped rising despite a surge in our oil bill,” said Michael Fenollosa, economist at John Hancock in Boston. “The underlying trend continues to improve as U.S. exporters benefit from foreign economies regaining their footing.”

So far this year, the U.S. trade deficit is running at an annual rate of $256 billion, far ahead of last year’s record imbalance of $164.3 billion.

For September, U.S. exports, which had hit a record in August, edged back 0.9% to $81.7 billion. But analysts said this reflected smaller September shipments of commercial aircraft after a huge increase the month before.

Imports, which have been at record levels all year, rose a slight 0.1% in September to $106.1 billion, but the increase was more than accounted for by a huge rise in the country’s foreign oil bill. Imports of autos and consumer goods, two other big categories, were actually down for the month.

The trade deficit, which has worsened because of a two-year global economic crisis that cut sharply into U.S. exports, is the one blot on an otherwise sizzling U.S. economy that has pushed the unemployment rate to a 30-year low of 4.1%.

In a separate report Thursday, the Labor Department said the labor market remains exceptionally tight, with new claims for unemployment benefits falling by 3,000 last week to 287,000, keeping the four-week moving average below 300,000 for the 17th consecutive week.

The new trade figures showed that U.S. exports of agriculture products rose by 2.5% in September to $4 billion, the highest level since February 1998, reflecting a return to growth in some countries leveled by the global financial crisis.

“With the world economy recovering, we expect our export picture to improve in the months ahead,” said Merrill Lynch economist Gerald Cohen.

Analysts noted that South Korea, Thailand and Brazil are starting to mount solid economic recoveries following steep recessions.

For September, the U.S. deficit with China widened by 0.5% to the record $6.9 billion. Imports from China soared to $8.2 billion, also a record and far exceeding the $1.3 billion in U.S. exports to China.

U.S. negotiators on Monday reached a landmark trade agreement in which China pledged to lower its high barriers to U.S. exports of manufactured goods, farm products and services in return for U.S. support of China’s membership in the World Trade Organization, the Geneva-based group that sets the rules for global trade.

The deficit with Japan rose by 3.8% in September to $6.6 billion, the second highest imbalance on record, exceeded only by $6.7 billion in July.

The U.S. deficit with the Organization of Petroleum Exporting Countries also set a record in September, rising to $3 billion as the U.S. foreign oil bill climbed $6.8 billion for the month, reflecting increased shipments and higher prices.

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Trade Deficit

The overall gap continues to reflect a deficit in the trade of goods and aTrade DeficitThe overall gap continues to reflect a deficit in the trade of goods and a surplus in services. In billions of dollars:

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September: --$24.4 billion

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Source: Commerce Department