US trade deficit narrows sharply in June buoyed by auto exports
By Alexander Bueso
Date: Wednesday 05 Aug 2020
(Sharecast News) - America's shortfall in trade on goods and services shrank sharply in June as exports bounced back at roughly twice the speed as purchases from overseas.
According to the Department of Commerce, in seasonally adjusted terms, the US international trade deficit shrank at a month-on-month pace of 7.5% to reach $50.7bn (consensus: $50.3bn).
Nevertheless, the lion's shares of the narrower deficit was the result of an increase in the surplus on trade in services from $0.1bn for May to $21.5bn for June.
The total trade deficit had also declined year-to-date, by 7.8% to $23.1bn against the comparable year ago period, with exports down 15.7% at $199.1bn and imports 14.2% lower to $222.3bn.
On the export side of the equation, sales of automotive vehicles, parts and engines were strongest, jumping by $4.9bn, while those of capital goods rose by $3.8bn with sales of civilian aircraft, industrial machinery, telecommunications equipment and electric apparatus all higher.
Exports of industrial supplies all grew as well, especially those of fuel oil, other petroleum products and crude oil.
As the June trade balance was in line with the Bureau of Economic Analysis's assumptions in its 'advance' second quarter estimate for gross domestic product, Barclays Research kept its own forecast for GDP growth in the June quarter at down by 32.8%.
"Historical evidence suggests that goods sector activity can recover lost output more readily than services, and the snap-back in goods trade is largely in line with global manufacturing PMIs that point to a fairly rapid recovery in manufacturing activity globally," Barclays Pooja Sriram said.
But she went on to add that trade volumes remained low, with exports 24.5% lower year-on-year in June and imports off by 19.9%.
"Hence, while the rebound in June trade volumes is encouraging, they have a long way to go before they return to pre-COVID levels."
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