US trade deficit balloons again

The trade deficit could put the dollar under pressure

The US trade deficit widened to the second-highest level on record in August, official figures have shown.

The deficit - the amount by which the value of imports exceeds the value of exports - rose to $54bn (43.2bn euros ; £30bn), the Commerce Department said.

The figure marked a 7% increase compared with the previous month, and fell just short of the record $55.8bn deficit seen in June.

It also outstripped the $51.5bn pencilled in by forecasters.

Oil price pressure

The Commerce Department said the increase reflected the impact of soaring oil prices, which had pushed up the cost of imported fuel.

It also blamed an unexpectedly high volume of imports from China for the deficit.

The figure is likely to be seized on by Democrat presidential challenger John Kerry, who has claimed that the yawning deficit reflects President Bush's failure to enforce trade agreements with other countries.

High volumes of cheap imports have contributed to large-scale job losses among US manufacturers in recent years.

A large trade deficit is potentially destabilising as it tends to weaken the value of the dollar relative to other currencies.

"A deteriorating trade gap is a double negative for the US economy because not only do falling net exports take away from GDP growth, but rising oil imports weigh on the US consumer," said Ashraf Laidi, currency analyst at MG Financial in New York.