WASHINGTON — Record imports from China pushed America's trade deficit higher in July, but U.S. exports also went up in a bit of good news for beleaguered manufacturers.
The Commerce Department's latest snapshot Thursday of the country's trade activity showed that the trade gap grew by 0.7 percent in July to $40.3 billion.
Imports of goods and services came to $126.5 billion in July, the second-highest level on record, and represented a 1.6 percent increase from June. As the United States' economy strengthens, so have imports of foreign-made goods.
"U.S. consumers have almost an insatiable appetite for imported goods," said Clifford Waldman, economist with Manufacturers Alliance/MAPI, a research group. Improvement in sales of U.S.-made goods to other countries during the month, meanwhile, was a hopeful sign for the worldwide economic slump and "shows that the global situation is getting a tad bit better," he said.
Exports totaled $86.1 billion in July, the strongest showing since May 2001, and marked a 2 percent increase from the previous month. A weaker U.S. dol—
lar also is helping U.S exports, making them less expensive to foreign buyers, economists said.
"Our exports improved solidly," said Joel Naroff, president of Naroff Economic Advisors. "Sales of food, industrial supplies, capital goods and vehicles were all up."
Separately, the Labor Department said new claims for unemployment insurance rose last week to a two-month high of 422,000. It suggested that cautious companies want to keep their work forces lean — discouraging news for job-seekers, economists said.
Also Thursday, mortgage giant Freddie Mac reported that the average rate on 30-year mortgages declined to 6.16 percent for the week ending Sept. 12, compared with last week's 6.44 percent.
For 15-year fixed-rate mortgages, a popular option for refinancing, rates fell to 5.46 percent from 5.77 percent. Rates for one-year adjustable mortgages dipped to 3.87 percent from 3.98 percent.
On the trade front, the Bush administration believes the way to deal with rising trade deficits is for other countries to remove trade barriers. That would allow U.S. companies to do business more freely in overseas markets, thus boosting America's global competitiveness, the administration says.
Critics say growing trade deficits are proof that the administration's free-trade policies are not working. U.S. companies have moved operations overseas and imports are flooding into the United States, a situation that has resulted in hefty losses of American manufacturing jobs.
That — along with a bout of economic hard times at home and abroad — also has hurt the U.S. manufacturing sector. Manufacturers have lost nearly 16 percent of their work force, or 2.7 million jobs, in a record 37 straight months.
America's politically sensitive trade deficit with China widened to a record $11.3 billion in July. Imports from the country totaled $13.4 billion, an all-time monthly high.