Oil imports lead to record trade gap in July

WASHINGTON (MarketWatch) -- Higher prices for imported oil pushed the U.S. trade gap of goods and services to a new record in July, a government report showed Tuesday.

The nation's trade deficit widened by 5% in July to $68.0 billion, the Commerce Department said. This beats the previous record of $66.6 billion set last October.

The U.S. imported $20.8 billion worth of crude oil in July, the highest amount on record. The import average price per barrel of crude oil was a record $64.84 in the month.

The widening of the deficit was larger than expected. The consensus forecast of Wall Street economists had been for the deficit to widen to $65.4 billion. 

The worsening deficit will be a drag on economic growth in the third quarter.

For the first seven months of the year, the trade gap is $453.0 billion. This is a faster pace than the same period last year, meaning that the record $716.7 billion annual deficit set last year could be broken.

In July, imports rose while exports declined. This is the first drop in exports since February.

Imports increased 1.0% to a record $188 billion, while July exports fell 1.1% to $120 billion.

Imports of goods alone rose 1.4% in July to $159.1 billion. The U.S. imported a record amount of petroleum, industrial supplies, capital goods and consumer goods in July.

Meanwhile, exports of goods alone fell 1.5% in July to $73.4 billion. The U.S. exported a record amount of autos and auto parts in the month. Exports of civilian aircraft fell 18.9% to $2.59 billion.

The petroleum deficit widened 4.3% to $25.6 billion, the second highest on record.

The value of U.S. oil imports rose to $20.8 billion in July from $20.5 billion in June. The quantity of oil imports fell to 321.6 million barrels from 330.9 million in June.

The U.S. trade deficit with China widened to $19.6 billion in July from $17.6 billion in the same month last year. The trade gap with China rose to $121.3 billion in the first seven months of the year from $107.7 billion in the same period last year.

But U.S. exports to China set a new record in July.

China reported Monday that its August trade surplus rose to a record $18.8 billion, the fourth straight monthly record.

The U.S. set record monthly trade deficits with the European Union and the OPEC nations. 

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