US Trade Deficit Hits Record After Boeing Strike and Hurricanes

Record oil prices as a result of Hurricane Katrina and a strike at plane-maker Boeing sent America's trade deficit surging to an unprecedented $66.1bn (£37.8bn) in September, the US commerce department announced yesterday.

Shattering the previous record shortfall of $60.4bn in February, the scale of the deterioration shocked a Wall Street that had been bracing itself for bad news following the devastation to Louisiana and Mississippi at the end of August.

"We knew that there were going to be some hurricane-related distortions in the September data. But this really exceeded our worst fears. This was a turn for the worst," said Michael Woolfolk, senior currency strategist for Bank of New York.

The dollar, strong in recent weeks against the euro, the Japanese yen and the pound, fell briefly after the trade figures were announced but then quickly shrugged off news that the US trade gap had widened by more than 11% in the month.

Economists said the strengthening of the US dollar was making the trade picture worse by pushing up the cost of exports and lowering the costs of imports. They added that much of the deterioration in September had been caused by special factors - the rise in the oil price and the closure of US oil facilities following Hurricane Katrina, and the strike at Boeing.

Overall, imports jumped 2.4% in September to a record $171.3bn, led by the record value of petroleum imports resulting from the leap in the cost of crude oil to more than $70 a barrel. Imports of services were near all-time highs, the commerce department said.

US exports tumbled 2.6% to $105.2 billion, the worst since the September 2001 attacks on the United States. Exports through the US Gulf region fell more than 16% from August. The strike at aircraft maker Boeing meant commercial aircraft exports fell $2.4bn to $925m. Boeing sold only two planes overseas in September, compared with 26 the previous month.