WASHINGTON-The US trade deficit grew slightly in July, a small bit of negative news for the US economy, as exports to Germany, France and other European nations shrank and imports from China soared to a new record. The monthly trade shortfall was US$42 billion, compared to a downwardly revised estimate of US$41.9 billion for June, as both overall imports and exports declined. But analysts surveyed before the report had expected a bigger trade deficit of around US$44 billion.
The ongoing debt crisis in Europe appeared to be taking a toll on demand, with US exports to the 27 nations of the European Union falling 11.7 per cent in July. Exports to Germany were the lowest since February 2010 and the trade gap with the EU was the biggest since October 2007.
"The global volume of trade is slowing because of the weakening global economy, but the ripples in the U.S. have not been too severe so it's not a growth stopper at all. There is no indication the GDP in the third quarter should be revised down," said Pierre Ellis, senior global economist, at Decision Economics in New York.
The US?economy grew at just a 1.7 per cent annual rate in the second quarter of this year. Growth in the third quarter is expected to show improvement, but the jobless rate remains stubbornly high at over eight per cent. "In short, the report suggests that exports are starting to weaken, although the statistical impact on GDP will probably be neutralised by relatively weak imports as well," said Jim O'Sullivan, chief US economist at High Frequency Economics in Valhalla, New York.
Reuters
