Trade gap boosted by oil imports

Deficit grows more than expected. Reports also shows hints of economic weakness.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Lara Moscrip, CNNMoney.com contributing writer

Where would you like to retire?
  • By the water
  • Close to family
  • In a big city
  • Where I'm living now

NEW YORK (CNNMoney.com) -- Record oil prices sent the trade deficit to a 16-month high in July, according to a government report released Thursday that also showed signs of economic weakness.

The Commerce Department reported that imports exceeded exports by $62.2 billion, up from an upwardly revised $58.8 billion in June. Economists had expected a $58 billion gap, according to a consensus estimate compiled by Briefing.com.

The gap was the widest since the $62.3 billion deficit posted in March 2007.

The report was strongly colored by oil prices, thanks to the $147.27-a- barrel record set July 11. Because the report is lagging, it doesn't reflect the more than 30% drop in oil prices over the past two months.

Excluding petroleum, the trade gap actually shrank to $29.6 billion from $32.5 billion in June, according to Bob Brusca, an economist with FAO Economics.

"If you strip oil out of the report, you see that imports are weak, exports are strong, and the deficit is shrinking," said Brusca. "Oil is a big misdirection as far as understanding the direction of trade."

Petroleum imports - which made up just under a quarter of the total - increased 13.7% from the month before, and were up nearly 31% from January. Oil helped raise overall imports to $230.3 billion from $221.6 billion, aided by the record $124.66 average price in July for a barrel of crude.

The month's imports of 342 million barrels of crude oil were the highest in four years, with total crude oil July imports reaching a record $42.6 billion.

The record $24.2 billion July deficit with OPEC marked a 33.7% increase from June, and a 124.1% increase from July 2007.

Although there was a small increase in inflation-adjusted, non-petroleum imports, they remained below levels reached earlier this year - a signal to Brusca that the economy is in decline.

"Declining imports are a harbinger of bad GDP results and bad domestic demand," Brusca said.

The increases in imports, aside from petroleum, came from capital goods, and the foods, feeds and beverages category.

Exports rose to $168.1 billion from $162.8 billion in June. Export categories with the strongest growth included industrial supplies, capital goods, autos and consumer goods. There were slight declines in the feeds, food and beverages category.

The trade gap with China increased 16.4% in July, to $24.9 billion from $21.4 billion. On a year-to-year basis, the gap has widened by 4.6%. To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
Want to buy -- and live in -- a piece of history? It's not that far out of reach. These historic homes are not only for sale, they are incredible bargains. More
5 ways retailers are tracking you If you think pesky salespeople are invading your personal space, check out these 5 technologies that are tracking your movements throughout a store. More
Moto X vs. Droid Turbo: Which Droid should you buy? Motorola has made the two best Android smartphones this year. Here's how they stack up. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.