US trade deficit hits fresh high

The cost of oil imports to the US hit a new high in July

The US trade deficit hit a fresh high of $68bn (£36bn) in July, due to the cost of crude oil imports reaching a new record, official data has shown.

The figure was up 5% on June's deficit, and the gap for 2006 as a whole is now set to exceed 2005's record $717bn.

While US exports of goods and services fell 1.1% to $120bn in July, the Commerce Department said total imports rose 1% to $188bn.

Crude oil imports in July totalled $28.5bn, pushed up by high prices.

'Front page material'

Despite the overall increase in the gap between what the US imports and exports, its politically sensitive deficit with China declined slightly in July to $19.6bn.

However, the deficit with China is still on track to exceed last year's $202bn record level.

Tim Mazanec, senior currency strategist at Investors Bank & Trust in Boston, said that while the figures were undeniably hard-hitting, matters had since improved.

"It's front page material but at the same time, the numbers kind of bode well for future growth," he said.

"First everyone knows how crude prices have come off and that's a big portion of the entire trade."