Weak U.S. Exports Blamed For Growing Trade Gap June Deficit Hits $11.4 Billion, Raises Chances That 1995 Will Be Record Year

America’s trade deficit widened to $11.4 billion in June, the second-worst showing on record. Weakness in U.S. exports and another rise in the nation’s foreign oil bill offset falling demand for imported cars.

Through the first six months of this year, the Commerce Department reported Thursday, the trade deficit in merchandise alone is running at an annual rate of $188 billion. The previous all-time high of $166 billion was set last year.

The Clinton administration insisted that the deficit would soon start shrinking, but some economists worried that the dollar’s recent rise could make it even harder to cure America’s chronic trade problems.

The Commerce Department said the monthly deficit in goods and services was 2.4 percent higher than a revised May imbalance of $11.04 billion. It was the largest trade gap since a record deficit of $11.42 billion set in April.

The new report caught economists by surprise. They had been expecting the deficit to narrow as a slowing U.S. economy cut into demand for foreign products.

Imports, which had hit an all-time high in May, did backtrack slightly, dropping by 0.6 percent. But exports, also at a record high in May, fell at double that pace, 1.2 percent.

In a separate report, the Labor Department said the number of Americans filing first-time claims for unemployment benefits edged up by 6,000 last week to 338,000. Analysts predicted claims would drift higher in coming weeks as the economy remains sluggish.

The decrease in trade imports reflected a big drop of $354 million in shipments of foreign cars and parts and a $367 million decline in demand for other consumer goods such as toys and televisions.

On the export side, U.S. sales abroad of autos were also down for the month, falling by $548 million, while big-ticket exports such as aircraft engines and factory machinery fell by $281 million.

“I think in the next few months we will begin to see an improvement in the merchandise trade balance,” said U.S. Trade Representative Mickey Kantor.

Kantor noted that U.S. export growth, despite sluggish economies overseas, had remained strong this year. The trade gap has widened, however, because import growth has been even stronger.

The deficit with Japan did shrink for a third straight month in June, dropping by 3.7 percent to $5.29 billion. U.S. exports to Japan climbed to the second-highest level on record.

But critics said part of the improvement reflected the bruising auto trade fight, which disrupted shipments of Japanese luxury cars until the threat of punitive U.S. tariffs was lifted on June 28.