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Trade gap grew 8.8 percent in August

WASHINGTON - The U.S. trade deficit widened sharply in August, reflecting a surge in imports of consumer products as businesses restocked their shelves in hopes of a pickup in consumer demand.

The politically sensitive deficit with China climbed to an all-time high, a development that was certain to increase pressure on the Obama administration to take a tougher line on trade issues including China's tightly controlled currency.

The Commerce Department said Thursday the deficit in August increased 8.8 percent to $46.3 billion. Exports edged up a slight 0.2 percent, but this increase was swamped by a 2.1 percent jump in imports.

So far this year, the trade deficit is running at an annual rate of $502.5 billion, up 34 percent from the $374.9 billion deficit for all of 2009, which had been the smallest since 2003.

Last year's deficit was just half the total of the previous year, reflecting the country's deep recession. Economists had expected the deficit to rise this year but had forecast that a rebounding global economy would boost demand for exports.

Trade was the biggest drag on the economy during the spring, subtracting 3.5 percentage points from growth.

For August, the 0.2 percent rise in exports pushed them to $153.9 billion, the highest level in two years. The small gain reflected increases in U.S. sales abroad of farm goods, autos, computers and oil-field drilling equipment. The 2.1 percent rise in imports pushed them to $200.2 billion and reflected a big jump in demand for foreign food products.

- Bloomberg News.

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