US trade deficit falls more quickly than expected in June

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Sharecast News | 04 Aug, 2017

Updated : 16:28

America's trade deficit with the rest of the world shrank by more than expected in June with exports of services hitting a record.

The total shortfall in foreign trade in goods and services declined by 5.9% month-on-month to reach -$43.6bn, according to the Department of Commerce.

Economists had penciled in a shortfall of of -$45.5bn.

May's tally of -$46.5bn was revised slightly lower, to -$46.4bn.

Exports of goods and services increased by 1.2% on the month to $194.0bn - their highest level since December 2014 - while imports fell 0.2% to $238.0bn.

At $65.4bn, services exports were at their highest level ever, while those of goods, at $129.7bn, were at their best level since April 2015.

On the import side of the equation, purchases of capital goods from overseas ran at $52.9bn in June, which was also the highest level on record.

By countries, and in non-seasonally-adjusted terms, exports to India rose to $2.35bn, their best mark since the $2.37bn reached in June 2013, the Department of Commerce said.

In parallel, the US imported a record $4.3bn of goods and services from Italy.

The bilateral trade deficit on goods with the People's Republic of China widened from -$31.6bn to -$32.6bn in June.

In a research note sent to clients following Friday's release, Michael Pearce at Capital Economics said: "Real goods exports increased by a strong 1.6% m/m, benefiting from strong global growth and the weaker dollar.

"Even allowing for an upturn in imports, net trade should be broadly neutral for growth this year, after subtracting 0.5%-pts or so from annualised GDP growth over the previous three years."

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