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Highlights
The U.S. trade balance in June shrank, again thanks in part to lower oil prices but also from a general import dip. The trade deficit decreased to $42.9 billion from $48.0 billion in May (originally $48.7 billion). Analysts forecast a deficit of $47.5 billion. Exports advanced 0.9 percent, following a 0.3 percent rise in May. Imports shrank 1.5 percent after a 0.8 percent decrease in May.
The narrowing in the trade gap was led by the non-petroleum goods gap which narrowed to $34.4 billion from $37.5 billion in May. With help from lower prices, the petroleum deficit decreased to $22.5 billion in June from $24.8 billion the prior month. The services surplus slipped to $14.6 billion from $14.9 billion.
On a not seasonally adjusted basis, the June figures showed surpluses, in billions of dollars, with Hong Kong $2.6 ($2.9 for May), Australia $1.9 ($1.7), Singapore $1.2 ($1.0), among others. Deficits were seen, in billions of dollars, with China $27.4 ($26.0), OPEC $8.5 ($11.2), European Union $8.4 ($10.5), Japan $6.0 ($6.4), Mexico $5.9 ($6.3), Germany $4.1 ($4.9), Ireland $2.6 ($2.7), Canada $1.5 ($2.0), among others.
There are pluses and minuses in the detail. The big plus is that exports were positive. Looking specifically at goods (Census basis), exports rose 1.3 percent, following a 0.5 percent gain in May. The big negative was a dip in goods imports excluding petroleum which suggests softness in demand or at least expectations by business for softness in consumer and business spending. These imports dipped 0.9 percent after a 1.0 percent rise in May.
The latest numbers will help Q2 GDP revisions but there are still questions about demand further out.
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Market Consensus before announcement
The U.S. international trade gap in May narrowed, thanks largely to lower oil prices. The trade deficit narrowed to $48.7 billion from $50.6 billion in April. Exports rose 0.2 percent, following a 0.9 percent decline in April. Imports fell 0.7 percent after a 1.6 percent drop the prior month. The narrowing in the trade gap was led by the petroleum goods gap which shrank sharply to $24.9 billion from $28.1 billion in April. In contrast, the non-petroleum goods deficit expanded a little to $37.9 billion in May from $36.7 billion the month before. The services surplus improved to $14.8 billion from $14.6 billion.
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