June trade gap shrinks despite oil price surge
The U.S. trade deficit shrank unexpectedly in June, as the weak U.S. dollar helped push exports higher and overpowered record-high prices for imported oil, a Commerce Department report showed on Tuesday.
The trade gap totaled $56.8 billion, down from a revised estimate of $59.2 billion in May. The monthly tally was also much lower than the $61.5 billion midpoint estimate of analysts surveyed before the report.
Both exports and imports of goods and services set records in June, but exports rose by 4.0 percent compared to a 1.8 percent gain for imports.
The U.S. trade sector has been one of the bright spots for an economy struggling with a deep housing downturn and credit crunch. Trade contributed 2.4 percentage points to economic growth in the second quarter, which would have shrunk 0.5 percent without that support, according to preliminary estimates.
The June trade numbers are “slightly favorable for second-quarter GDP fast cash advance. Imports will be a little less of a drag on economic growth than appeared earlier. But weaker imports still reflect the overall weakness in the U.S. economy,” said Gary Thayer, senior economist at Wachovia Securities in St. Louis.
The dollar rose against the euro on news the trade gap narrowed in June, while U.S. Treasury prices held steady at higher levels and stock futures were mostly flat.
The smaller-than-expected trade gap “will support growth going into the third quarter,” said Kurt Karl, chief U.S. economist at Swiss Re in New York.
But the narrowing of the trade deficit also is one more piece of evidence the U.S. economy is in a recession because it shows consumers are buying less, he said.