The international trade balance measures the difference between imports and exports of both tangible goods and services. Imports may act as a drag on domestic growth and they may also increase competitive pressures on domestic producers. Exports boost domestic production. Why Investors Care
| Released on 8/14/07 For Jun 2007 | ||||||||||||
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Highlights
The nation's trade gap fell back in June to a lower-than-expected $58.1 billion from $59.2 billion in May. The improvement reflects higher exports, a reflection of strong global demand, and slowing imports, a reflection of slowing domestic demand including a decline in imports of consumer goods excluding autos.
The merchandise trade gap (Census basis) narrowed to $65.7 billion from a revised $66.0 billion deficit in May. The goods gap excluding petroleum was little changed in June at $42.3 billion, compared to $42.2 billion the prior month.
On the import side, overall merchandise imports increased $1.3 billion in June. Gains were seen in automotive, up $0.9 billion; capital goods excluding autos, up $0.6 billion; and in industrial supplies, up incrementally. Consumer goods excluding autos declined $0.2 billion while foods, feeds & beverages slipped marginally.
On the export side, merchandise exports increased $1.6 billion in June. Gains were seen in industrial supplies, up $1.2 billion, and in automotive, up $0.1 billion. Capital goods excluding autos and food, feeds & beverages rose marginally.
The oil trade deficit narrowed in June to $23.4 billion from $23.8 billion in May. Crude oil prices in June posted another gain, rising to $60.95 per barrel from $59.36 per barrel in May.
On a bilateral basis, the goods deficit with Canada widened from $5.2 billion in May to $5.8 billion in June. The goods deficit with China increased from $20.0 billion in May to $21.2 billion in June. The goods deficit with Mexico increased from $5.9 billion in May to $6.4 billion in June. Country balances are not seasonally adjusted.
Today's numbers show a healthy U.S. economy that appears to be in a modest but important transition. The consumer sector may be moderating a little while the export sector is strengthening. U.S. retailers are likely scratching their heads a little over how strong the consumer sector is given some recently volatile retail sales numbers and that can affect the size of imports of consumer goods which lag significantly from when orders are placed. But the rebound in retail sales in July will likely lead U.S. retailers to nudge up their orders for Christmas while U.S. manufacturers continue to smile over export growth.
The U.S. international trade gap widened in May to $60.0 billion from $58.7 billion in April. Most of the worsening was in petroleum but the non-petroleum deficit widened also but only incrementally. We will likely see a price induced jump in the petroleum deficit and the overall deficit for June. That increase should be no surprise. Focus should be on exports which have been trending upward and supporting U.S. manufacturing. Merchandise exports rose $2.3 billion in May.
International trade balance Consensus Forecast for June 07: -$61.0 billion
Range: -$62.0 billion to -$58.6 billion
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Exports grow when foreign economies are strong. The weaker the foreign exchange value of the dollar, the less expensive goods and services are to foreigners, and this also helps spurt export activity. Imports grow when U.S. economic growth is robust. Imports are also spurred by a strong foreign exchange value of the dollar. |
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The international trade balance has posted a deficit almost continuously since the 1980s. Any trade deficit is a drag on U.S. GDP growth, but a smaller deficit adds to growth, while a larger deficit decreases GDP growth. |
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