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.
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.