Weakening exports and surging imports pushed the US trade deficit to a record in June, according to data yesterday that pushed the dollar to three-week lows and led to warnings that growth estimates could be revised lower.
The Commerce Department reported that the gap widened by $8.9 billion (€7.3 billion) - a record shift for a single month - to $55.8 billion as exports slumped to their lowest in nearly three years while imports pushed to a record high, helped by a jump in the volume of oil imports.
Wall Street had expected the gap to narrow to $47 billion.
"It was a perfect storm. Everything that could happen to push the deficit wider, did," said Mr Henry Willmore, US economist at Barclays Capital.
Imports jumped 3.3 per cent in June to $148.6 billion while exports fell by 4.3 per cent to $92.8 billion - the biggest monthly drop since September 2001.
Mr Samarjit Shankar, director of global strategy at Mellon Bank in Boston, said the trade data were "shocking" and "unequivocally, structurally bad for the dollar".
"The trade issues are so bad [they are\] raising concerns about funding the current account deficit and that could take the dollar down into a new trading range," said Mr John McCarthy, director of foreign exchange at ING Capital Markets LLC in New York.
A sustained push of the euro well above $1.24 could enable the single European currency to rise as high as $1.28, he said.
The euro surged well over a cent after the data were released yesterday, hitting a fresh three-week high of $1.2363.
Economists said a fall-off in capital goods exports - large items such as aircraft and supercomputers - may have been responsible for the decline and could rebound next month.
"If two or three items that usually get shipped got delayed, it can have a marked effect on the figures," added Mr Willmore.
Economists expected the deficit in July to have narrowed from the June record, but warned the trend towards wider trade gaps was still in place. "It should be clear that the US is experiencing a real and accelerating deterioration in its international accounts," said Ms Rebecca Patterson, strategist at JP Morgan.
The report was also expected to prompt downwards revisions to second-quarter growth estimates from 3 per cent to 2.5 per cent.
Interest rate futures contracts rose, implying markets were pricing in slightly less chance of rate rises from the Fed than before the data.
Rising oil costs were a factor in the trade data. Oil accounted for $2.5 billion of the increase in the deficit.
A fall in consumer confidence was partially attributed to concerns about higher energy costs, which also added to producer inflation data.
