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U.S. goods trade deficit narrowed in June, but may still drag Q2 GDP
The goods trade gap contracted 4.2% to $101.5 billion, while exports fell to a five-month low and net trade is modeled to subtract about one percentage point from second-quarter GDP growth.
The U.S. goods trade deficit narrowed in June as imports fell broadly, but Reuters reports the improvement was likely not enough to stop trade from weighing on second-quarter economic growth. The Commerce Department data showed the goods deficit contracted 4.2% to $101.5 billion.
Exports dropped to a five-month low, with shipments of industrial supplies, including petroleum, falling. Reuters links the decline to a pullback in crude oil prices amid a fragile ceasefire between the U.S. and Iran.
Reuters added that the modeled impact of the trade data points to net trade subtracting around one percentage point from second-quarter GDP growth, even as resilient consumer spending and ramping business investment in artificial intelligence are expected to support activity. The report also showed government orders and shipments for non-defense capital goods rose strongly in June.
On the trade flows, goods imports decreased $8.2 billion to $306.2 billion, and the month’s imports were up 16.6% year-on-year. Reuters said imports of capital goods fell 2.0% in the month, but were up 37.4% versus the prior year, while exports fell $3.8 billion to $204.7 billion.
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