Oil imports hike US trade deficit

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The monthly US trade deficit rose 2.3% to $60.04bn (£29.5bn) in May, fuelled by demand for foreign oil and cheap Chinese consumer goods.

The value of goods exported rose 2.2% to $132bn, but this was eclipsed by an oil-driven rise in imports to $192.1bn.

The politically controversial imbalance with China widened 3% to $20.02bn.

There has been little sign of demand for Chinese products flagging, despite a number of health and safety scares involving Chinese-made goods.

Made in China

High-profile recalls of Chinese goods, ranging from tyres to toys and seafood, have led some US politicians to question the reliability of Chinese exports.

But during the first five months of the year, the US deficit with China was 17% higher than for the same period last year.

Imports of Chinese clothing and fish were particularly strong.

The US thirst for oil is expensive

China's overall trade surplus hit a record $26.9bn in May, with the surplus in Sino-US trade accounting for about two-thirds of the total.

The ever-widening imbalance has led to persistent US calls for China to adjust its exchange rate and get tougher on piracy to help foreign firms doing business there.

The overall US deficit hit a record $758.5bn last year, but has narrowed so far this year.

Standing at $295.5bn, it is currently 6.5% lower than at the same stage in 2006.

Oil pressure

May's rise, which was broadly in line with Wall Street forecasts, was largely due to a sharp rise in oil imports, particularly from members of the Opec cartel.

The US spent $19bn on oil imports, its highest monthly expenditure on the commodity since September.

Oil prices have since risen to $73 a barrel.

Meanwhile, the rising US deficit has contributed to a weakening of the greenback on international currency markets.

Both the pound and the euro reached record highs against the dollar this week.