The U.S. trade deficit narrowed more than expected in June
as petroleum imports dropped to a 3-1/2 year low, suggesting that trade was
less of a drag on second-quarter economic growth than initially thought. The
Commerce Department said on Wednesday the trade gap dropped 7.0 percent to
$41.5 billion, the lowest reading since January. May's trade deficit was
revised up to $44.7 billion.
Economists polled by Reuters had expected the deficit to
widen slightly to $44.7 billion in June from a previously reported $44.4
billion shortfall in May. When adjusted for inflation, the deficit narrowed to
$48.8 billion from $52.0 billion in May.
June's overall trade deficit was far smaller than what the
government had assumed in its first snapshot of second-quarter gross domestic
product published last week. That suggests the GDP growth estimate for the
quarter could be revised up.
Trade subtracted 0.61 percentage point from growth in the
April-June period. The economy expanded at a 4.0 percent annual rate
during that quarter after shrinking 2.1 percent in the first three months of
In June, imports fell 1.2 percent, the largest drop in a
year, to $237.4 billion. That came as petroleum imports declined to $27.4
billion, the lowest level since November 2010, from $28.3 billion in May.
A domestic energy boom has seen the country reduce its
dependence of foreign oil, helping to ease pressure on the current account
deficit. In June, the petroleum deficit fell to is lowest level since May 2009.
While non-petroleum imports fell to $167.6 billion from $169.6 billion in May,
food imports hit a record high.
In June, exports edged up 0.1 percent to a record high of
$195.9 billion. Exports were supported by a surge in automobiles, parts and
engines, which rose to a record high. Exports of consumer goods were also the
highest on record. Rising exports bode well for economic growth prospects for
the rest of the year. Exports to Canada hit an all-time high in June. Exports
to China rose 1.4 percent, while imports from that country increased
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