The U.S. trade deficit increased the most in more than 10 years in July as rebounding consumer demand led to a record increase in imports, a government report showed on Thursday.
The trade gap expanded 16.3 percent in July to $32.0 billion, the biggest month-to-month increase since February 1999.
Imports leapt a record 4.7 percent on improved U.S. appetite for foreign cars and consumer goods and on higher oil prices, which rose for a sixth consecutive month.
Meanwhile, a second report showed the number of U.S. workers filing new claims for jobless benefits fell last week to 550,000 and the number of workers still collecting benefits fell to 6.088 million in the week ended Aug. 29, the lowest level since the week ended April 4.
"By and large, these are signs the economy is improving despite the fact the trade deficit is widening," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York.
Although the drop in jobless claims indicates a healthier labor market, "we haven't seen hirings pick up yet. We might have the worst of the firings over but the companies are not confidant enough in hiring," said John Canally, economist at LPL Financial in Boston.
The increase in imports shows the U.S. consumer "may have turned the corner" and businesses could be stocking up for the holidays, but the widening trade gap will prompt some analysts to lower their estimate of third-quarter economic growth, Canally said.
Wall Street analysts had expected the trade deficit to be little changed from June, which the Commerce Department revised to $27.5 billion from its original estimate of $27.0 billion
U.S. imports grew for the second consecutive month to $159.6 billion, led by a $2.4 billion increase in imports of cars and car parts and a $1.7 billion increase in consumer goods such as medical drugs, toys, clothing and televisions.
Auto and auto parts imports were the highest since December and may have reflected dealers building up inventory in anticipation of Congress' "cash for clunkers" program to encourage motorists to exchange old gas guzzlers for new more fuel-efficient vehicles.
A sixth consecutive monthly rise in the average price of imported oil to $62.48 per barrel also helped widen the trade gap. Overall imports of petroleum products were the highest since December.
The trade deficit with China grew 10.8 percent in July, as imports from the Asian manufacturing giant hit their highest level since November.
The July trade gap remained far below the record of $64.9 billion set in July 2008, just before the global financial crisis took a huge bite out of international trade.
U.S. exports also increased for the third consecutive month in July to $127.6 billion, a rise of 2.2 percent from June.
Goods exports had their best showing since December, led by increases for autos and auto parts and capital goods.
U.S. exports to Mexico were the highest since November 2008, although shipments to the European Union were the lowest since July 2006.
