Dim news on jobs and U.S. trade gap

WASHINGTON - The U.S. trade gap hit a 16-month high in July, and the job market is shrinking, according to two government reports yesterday.

They are signs that the nation's economy may be deteriorating further, analysts and business leaders said, and that could intensify the political debate on how to fix the problems less than 60 days before Americans choose a new president.

The trade report showed that U.S. exports to other countries rose to a record, but that was more than offset by the high price of oil imports in July. The result, the Commerce Department said, was an increase in the trade deficit to $62.2 billion.

Worse still, economists expect slowing economies in Europe and Asia will reduce export growth later this year.

In the other report, the Labor Department said new applications for unemployment benefits stayed at a higher level than expected last week as the struggling economy continued to take a toll on workers.

In a sign the job market could get worse, nearly one-third of the country's top executives expect to cut payrolls in the coming months, according to a survey released yesterday by the Business Roundtable, an association of chief executive officers at large companies.

Economists welcomed the continued strength in exports, which have been the primary driver of the U.S. economy in a year when the country has been battered by a prolonged slump in housing, rising unemployment, and a severe credit crunch.

But David Resler, chief economist at Nomura Securities Co. Ltd., said in a note to clients that export growth "underscores a new vulnerability" for the economy as overseas economic growth "appears to be slowing abruptly."

Last week, the Labor Department said the unemployment rate had increased to a five-year high of 6.1 percent in August as employers cut 84,000 jobs, the eighth straight month of cuts.

The data released yesterday by the department indicated the layoffs were continuing. New jobless-benefit claims dropped 6,000, to a seasonally adjusted 445,000. But that was a smaller decline than expected; analysts had forecast 440,000 new claims.

The number of people continuing to draw jobless benefits increased to a five-year high of 3.53 million.

The July trade gap between imports and exports rose 5.7 percent from June, the Commerce Department said. The total for July was much worse than the $58.8 billion Wall Street economists had expected.

Oil prices rose to record levels of $147 in July, pushing the nation's foreign-oil bill to an all-time high of $51.4 billion.

The big rise in oil prices offset another strong showing for U.S. exports, which rose 3.3 percent to a record $168.1 billion.

Oil prices fell in August, and they are continuing to go down. Yesterday, the price of crude dropped to $100.87 a barrel.