Cheer as US trade deficit narrows

The US trade deficit narrowed more than expected in June as petroleum imports dropped to a three-and-a-half year low, suggesting that trade was less of a drag on second-quarter economic growth than initially thought.
By The Newsroom
Published 6th Aug 2014, 19:08 BST

The Commerce Department said yesterday the trade gap dropped 7.0 per cent to $41.5bn, the lowest reading since January. May’s trade deficit was revised up to $44.7bn.

Economists had expected the deficit to widen slightly to $44.7bn in June from a previously reported $44.4bn shortfall in May.

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When adjusted for inflation, the deficit narrowed to $48.8bn from $52.0bn 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.

The government estimated a week ago that trade subtracted 0.61 percentage point from growth in the April-June period.

In that report, it said the economy expanded at a 4.0 per cent annual rate during that quarter after shrinking 2.1 per cent in the first three months of the year.

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US financial markets were little moved by the data. In June, imports fell 1.2 per cent, the largest drop in a year, to $237.4bn. That came as petroleum imports declined to $27.4bn, the lowest level since November 2010.