WASHINGTON — United States exports were hurt by an ailing global economy in August and imports from China surged, propelling the largest expansion of America's trade deficit in five months.
[ Reuters | October 6, 2015 | The New York Times ]
The data released on Tuesday by the Commerce Department illustrate the American economy's vulnerabilities to a strong dollar and weak demand in foreign markets, which could impose further caution on the Federal Reserve's plans to increase interest rates.
The trade deficit swelled 15.6 percent, to $48.3 billion, in August, according to data adjusted for seasonal factors.
The scope of the increase was accentuated by the unusually narrow trade deficit registered in July. Also, imports most likely received a temporary surge from inflows of cellphones before the release of Apple's new iPhone model.
But the size of the trade gap has risen far above the average levels seen in recent years, and the onus for stronger United States economic growth is now falling squarely on consumers.
"Trade will remain a drag on the real economy until well into next year," said Steve Murphy, an economist at Capital Economics.
Sales of American goods and services abroad fell 2 percent, to their lowest level since October 2012. Exports to Mexico fell by $1.5 billion in August, and the European Union bought $500 million less from America than it did in July, according to data on bilateral trade, which is not seasonally adjusted.
The declines are partly because of expectations of higher interest rates in the United States, which have pushed the value of the dollar higher, reflecting the strength of America's economy relative to its trading partners’. A stronger dollar makes American goods less competitive abroad.
Weaker demand abroad is also playing a role, and the United States Treasury secretary, Jacob J. Lew, will ask policy makers from other countries gathering in Lima, Peru, this week to stimulate their economies to kick-start global growth.
Also on Tuesday, the International Monetary Fund cut its global growth forecasts for the second time this year, citing weak commodity prices and a slowdown in China. It also warned that policies aimed at increasing demand were needed.
A 3 percent increase in American imports from China also factored into the widening of the trade deficit. China's currency has depreciated sharply in recent months, reflecting concerns of a possible crash in the Chinese economy, which is the second largest in the world after the United States.
Until recently it appeared that the American economy was largely shrugging off weakness abroad. But last week, new data showed a sharp slowdown in employment growth in August and September. This has driven doubts on Wall Street over the assertion two weeks ago by the Fed chairwoman, Janet L. Yellen, that the economy would be strong enough to warrant an interest-rate increase this year.