Source: AFP
The US trade deficit narrowed slightly less than analysts expected in June, according to government data released on Tuesday, helped by a rise in exports.
The trade gap in the world’s largest economy narrowed 2.5 percent to $73.1 billion, slightly larger than the $72.8 billion analysts had expected, the Commerce Department said.
The figure was helped by a bigger rise in exports than imports, with the former rising 1.5% to $265.9 billion.
The civil aircraft and industrial supplies sectors helped boost exports, while imports rose thanks to goods such as pharmaceuticals and semiconductors.
However, imports were offset by a decline in some sectors, including crude oil, the report showed.
The U.S. goods deficit with China fell $1.6 billion to $22.3 billion in June, according to the Commerce Department report.
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GDP strength
“This report confirms that trade led to GDP growth in the second quarter — as revealed in the initial GDP estimates,” economists Carl Weinberg and Rubeela Farooqi of High Frequency Economics said in a note.
“The widening of the deficit is due to a steady rise in imports driven by continued strong domestic demand,” they add.
US consumer demand is weakening, while the labor market weakened significantly in July amid high interest rates.
US economist Matthew Martin of Oxford Economics believes inventory levels signal that “businesses believe there is healthy demand on the horizon from consumers”.
Oxford Economics expects imports to continue to outpace exports for the rest of the year.
“Exports have struggled due to weak global demand and the weight of a strong dollar. However, the global picture is brightening slightly and the dollar has been relatively stable this year,” Martin added in a note.
Source: AFP
