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VOL. 128 | NO. 109 | Wednesday, June 05, 2013

US Trade Deficit Up 8.5 Percent to $40.3 Billion

MARTIN CRUTSINGER | AP Economics Writer

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WASHINGTON (AP) – The U.S. trade deficit widened in April, as demand for foreign cars, cell phones and other imported goods outpaced growth in U.S. exports.

The Commerce Department said Tuesday that the trade gap rose 8.5 percent in April from March to $40.3 billion.

Exports increased 1.2 percent to $187.4 billion, the second-highest level on record. Companies sold more telecommunications equipment, industrial machinery and airplane parts, while U.S.-made autos and auto parts also rose to an all-time high of $12.8 billion.

But imports grew an even faster 2.4 percent to $227.7 billion. Sales of foreign cars increased to $25.5 billion. Americans also bought more consumer goods, led by big gain in foreign-made cell phones.

A wider trade gap can restrain growth because it means U.S. consumers and businesses are spending more on foreign goods than U.S. companies are taking in from overseas sales.

But Joel Naroff, chief economists at Naroff Economic Advisors, said the wider deficit does show growth in the U.S. remains stronger than most others nations. And that growth has helped fuel more spending by consumers on imported goods.

"The U.S. economy may not be robust but with growth continuing, the demand for foreign goods is picking up," Naroff.

Most economists said trade will likely be neutral in the April-June quarter after subtracting slightly from growth in the January-March quarter. They expect economic growth has slowed to an annual rate of around 2 percent, down from a 2.4 percent rate in the first quarter.

Still, a weaker global economy is reducing demand for U.S. exports and that could weigh on growth this year.

Europe's recession continues to be a problem for U.S. companies. The deficit with the 27-nation European Union grew 25.6 percent to $12.4 billion. U.S. exports to the region declined 7.9 percent, while imports from the region rose slightly.

The politically sensitive deficit with China surged to $24.1 billion, the highest level since January and the largest with any single nation. Imports jumped 21 percent, while exports fell 4.7 percent. The March deficit had been artificially lowered by shipping disruptions caused by the Chinese New Year holiday.

The April deficit with South Korea climbed to a record $2.4 billion. Imports from that country rose to an all-time high of $5.6 billion.

Fewer exports have slowed activity at American factories, according to a measure of U.S. manufacturing released Monday.

The Institute for Supply Management said Monday that its index of manufacturing activity fell to 49 last month from 50.7 in April. It was the lowest reading since June 2009 and the first time the index had slipped below 50 since November. A reading under 50 indicates contraction in manufacturing.

A measure of export orders in the ISM report fell to its lowest level since January.

The weakness abroad has coincided with less investment by U.S. businesses, possibly out of concern that government spending cuts could hobble economic growth.

The deficit so far this year is running at an annual rate of $491.9 billion, down 8 percent from the revised annual deficit of $534.7 billion for 2012.

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 87 87 14,804
MORTGAGES 80 80 19,410
FORECLOSURE NOTICES 22 22 3,817
BUILDING PERMITS 142 142 35,472
BANKRUPTCIES 62 62 14,096
BUSINESS LICENSES 62 62 5,053
UTILITY CONNECTIONS 99 99 21,532
MARRIAGE LICENSES 37 37 4,594

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