The US trade deficit widened much more than expected in June, hitting a record $55.8 billion dollars on the biggest drop in exports in nearly three years and record imports, the government said today.
In a separate report, the government said prices received by producers moved up only slightly last month, suggesting scant inflation pressures at the wholesale level.
Wall Street economists had expected the trade gap to widen, but looked for a deficit of just $47 billion. They said the wider-than-expected gap would lead the government to ratchet down its reading on second-quarter growth, which it had put at a 3 per cent annual rate in a snapshot late last month.
"It's extraordinary, I've never seen this big a swing in one month" in the trade deficit, said Mr Kevin Logan, an economist at Dresdner Kleinwort Wasserstein in New York.
The dollar fell broadly after the data, while prices for US bonds rose as traders saw the latest data as suggesting a somewhat slower pace of interest-rate rises from the Federal Reserve than had been expected.
The Labor Department said prices received by farms, factories and refineries rose 0.1 per cent in July, after a 0.3 per cent fall in June as a spike in energy prices was largely offset by a sharp plunge in food costs. Economists had expected a 0.2 per cent gain.
Core producer prices, which strip out volatile food and energy costs, also gained a slim 0.1 per cent, as expected.