Trade Deficit Grows in June

The United States’ international trade deficit grew month-over-month in June by $2.2 billion to $63.3 billion as exports grew by $1.1 billion to $120.2 billion, but remained overshadowed by imports, which jumped $3.3 billion to $183.5 billion.

In its latest monthly Advance Economic Indicators report, released this morning, the U.S. Census Bureau also saw wholesale inventories essentially unchanged in June from May at $589.3 billion, while retail inventories increased 0.5% to $604.2 billion—year-over-year, retail inventories in June were up 5.6%.

Meanwhile, inventories of durable goods fell 0.4% in June to $353.7 billion as inventories of nondurable goods ticked up 0.8% to $235.6 billion, Census said. This decline follows yesterday’s report from the Commerce Department of a 4%, or $9.3 billion, drop to $219.8 billion in new orders for manufactured durable goods in June.

“It is the biggest one-month fall since the recession,” said NACM Economist Chris Kuehl, Ph.D. “There is little mystery as far as why. The sectors that saw the biggest erosion are those that rely on foreign markets. They have been affected by the sharp hike in the value of the dollar. This is the question that has been answered: Will the Brexit affect the U.S.? It seems so. The aircraft sector saw a bad month as Boeing watched several sales discussions fail and most of the other sectors that rely on exports had a similarly bad month. The overall pace of manufacturing outside overseas sales was not too bad, but this growth was not enough to offset the overseas issues.”

The biggest seasonally adjusted export gainer from May to June was consumer goods, which climbed 5.6% to $16.4 billion, Census said. Industrial supplies followed closely behind, with a 5.4% gain to $32.4 billion in June. Exports of other goods declined 3.4% $5.2 billion, while automotive vehicles dipped 3.3% to $12.1 billion.

Imports of industrial supplies also jumped in June by 5.7% to $38.2 billion, while 3.2% more consumer goods were brought into the country, amounting to a total of $49.5 billion, Census said. Imports of foods, feeds and beverages declined by 3.4% in June to $10.4 billion, and automotive vehicle imports dropped 1.9% to $28.4 billion.

- Nicholas Stern, editorial associate

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