The longstanding U.S. trade imbalance improved sharply in June as the deficit fell to $34.2 billion, down from a revised $44.1 billion in May and the lowest in nearly four years. The goods and services deficit decreased $8.2 billion from June 2012 to June 2013.
U.S. exports increased by $4.1 billion in June to $191.2 billion. Imports decreased by $5.8 billion to $225.4 billion. The goods deficit was $53.2 billion while the services surplus was $18.9 billion.
“This morning's report is unambiguously a positive one for second quarter GDP, which should see a sizeable revision (+0.7 percentage points) when the second estimate is released at the end of the month,” said Michael Dolega, an economist with TD Economics.
Exports of goods increased $4.0 billion to $134.3 billion. For the first half of 2013, U.S. exports of goods are up $7.2 billion. Exports increased in June for industrial supplies and materials ($1.5 billion), capital goods ($1.5 billion), consumer goods ($1.0 billion), and food and beverages ($0.3 billion).
U.S. exports of advanced technology products increased $2.4 billion from May to $29.4 billion in June. Imports fell $1.4 billion to $32.7 billion.
The U.S. trading deficit with China fell by $1.2 billion to $26.6 billion in June. For the first six months of 2013, the deficit stood at $147.7 billion. Deficits narrowed for the month with both Canada ($1.6 billion) and Mexico ($4.8 billion). The U.S. ran its largest trade surpluses in June with Hong Kong ($3.4 billion), Australia ($1.7 billion) and Brazil ($1.6 billion).
TD Economics’ Dolega predicted the deficit would widen next month as the U.S. recovery outpaces many of its trading partners, but over the longer term, he opined that the deficit would narrow “as a recovering global economy boosts exports and increasing domestic oil production takes a bite out of import volumes.”