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Friday, 17 August, 2001, 22:25 GMT 23:25 UK
US trade gap widens
Boston docks
The trade gap widened to $29.41bn
The effects of the worldwide economic slowdown were evident again in the latest trade figures released by the US.

They showed the US trade deficit increasing to $29.41bn in June, up from a revised $28.47bn in May.

The general slowdown in trade was reflected in the fact that both exports and imports fell during June to their lowest levels since early last year.

"The report shows a synchronous global slowdown is occurring," said Jay Bryson, global economist at Credit Suisse First Boston.

Dollar debate

Many US manufacturers are complaining that the dollar is valued too highly on the foreign exchanges, which makes their exports uncompetitive.

But the US government has given no signs that it plans to deliberately weaken the value of the dollar.

Over the past few days though the dollar's value has been slipping on the currency markets, as dealers become increasingly worried about the prospects for the US economy.

On Tuesday, the International Monetary Fund warned that the US dollar was in danger of falling sharply against other major currencies because of the size of the US's trade deficit.

An end to growth?

The worsening trade deficit is likely to increase speculation that US growth stalled during the second quarter.

The initial estimate of 0.7% growth in gross domestic product by the US Commerce Department was made before some key items of data were made available.

Numbers released since then including information on inventories and construction have been weaker than expected.

Exports fall faster

The trade data showed exports fell faster than imports, dropping to $85.95bn.

The level of imports fell for the third month running, to $115.36bn.

The US Commerce Department said the fall in exports was led by a decline in capital goods such as manufacturing equipment.

The drop in imports was led by a fall in industrial supplies and capital goods.

Consumer sentiment better

There was better news for the US economy as new figures showed that US consumers were feeling better about their financial position.

The University of Michigan's preliminary consumer sentiment index rose to 93.5 in August from 92.4 the previous month - beating analysts expectations.

"The consumer continues to hang tough," said John Ryding, senior economist at Bear Sterns.

But there was a sign that President Bush's tax cut programme, which will give tax rebates of $300 to US taxpayers, may not significantly increase consumption.

Only 18% of people who took part in the survey said they would go shopping with the extra money.

The BBC's Stephen Evans
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See also:

16 Aug 01 | Business
O'Neill stamps on dollar speculation
15 Aug 01 | Business
Mixed signals on US economy
15 Aug 01 | Business
Dollar slips on IMF warning
14 Aug 01 | Business
US retail figures beat forecasts
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