- The Washington Times - Friday, June 9, 2006

1:52 p.m.

The U.S. trade deficit rose in April after two months of rare declines, pushed higher by surging oil prices and a flood of imported furniture, televisions and toys from China.

The gap between what the United States sells abroad and what it imports rose to $63.4 billion in April, the Commerce Department reported today. That was a 2.5 percent increase from the March deficit of $61.9 billion, but it was significantly lower than the $65 billion trade gap Wall Street had been expecting.

The deterioration in the deficit was almost all accounted for by a $1.44 billion increase in America’s foreign oil bill, which rose to $23.8 billion. That reflected a big jump in crude oil prices, which hit a record high of $75.17 per barrel in late April.

Analysts said that even with the lower-than-expected increase in the April deficit, trade still will act as a drag on the economy in the current quarter.

Ian Shepherdson, chief U.S. economist at High Frequency Economics, predicted the trade deficit would subtract about one-half a percentage point from overall economic growth in the April-June period. He predicted higher trade deficits in coming months, reflecting soaring global oil prices.

The small increase in the April deficit reflected a 0.7 percent rise in imports, which climbed to $179.1 billion, the second-highest level on record. In addition to a higher oil bill, imports of autos and auto parts were up, and shipments of consumer goods from China also rose. That helped push America’s total deficit with China to $17 billion in April, up 9.4 percent from March but still below the record monthly high of $20.4 billion set in October.

U.S. exports of goods and services slipped 0.2 percent to $115.7 billion, just slightly below the record high set in October. The decline was led by a big drop in commercial aircraft shipments, a volatile category that had been posting huge gains.

The trade deficit actually fell in both February and March after hitting a record high of $66.2 billion in January. But even with two months of improvement, the deficit so far this year is running at an annual rate of $762.5 billion, 6.4 percent higher than the record of $716.7 billion set for 2005.

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