US trade gap falls sharply in June
Print Edition
The United States trade deficit narrowed sharply in June to its lowest level in more than three and a half years. Exports rose to an all-time high and imports declined, signs that economic growth could be stronger than previously thought.
The US Commerce Department yesterday said the June deficit fell 22.4 percent to US$34.2 billion. That’s the lowest since October 2009 and down from May’s imbalance of US$44.1 billion, which was revised lower.
Exports rose 2.2 percent to US$191.2 billion in June. US companies shipped more aircraft engines, telecommunications equipment and farm goods.
Imports dropped 2.5 percent to US$225.4 billion. Oil imports declined to the lowest level in more than two years.
The steep decline in the June deficit could lead the government to revise its growth estimate for the April-June quarter a little higher.
Last week, the government said the economy grew at a lackluster annual rate of 1.7 percent in the second quarter, in part because trade cut nearly a full percentage point from growth. But the government estimated the June trade figures when calculating its first read on economic growth. The government will offer a more complete estimate for second-quarter growth on August 29. That will include June’s upbeat trade figures.
Pierre Ellis, of Decision Economics, said the trade data could add 0.2 percentage point to 0.5 percentage point to growth. He said the estimate could be on the lower end if businesses held lower stockpiles in June after shipping more goods.
Many economists think overall economic growth has started to rebound in the July-September quarter. Some say growth could near a 3 percent annual rate. A key reason is that several export markets, including Europe, are seeing improvement.
For June, US exports to the 27-nation European Union rose 1.5 percent. That helped shrink the deficit with the region to US$7.1 billion.
The deficit with China fell 4.3 percent to US$26.6 billion. Through the first six months of 2013, the imbalance with China is up 1.9 percent year on year.
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