US: Trade deficit narrowed in June on export growth  - Wells Fargo

According to analysts from Wells Fargo, stronger growth in the rest of the world is helping to boost US real export growth. They point out that the strong momentum means that real export growth likely will be positive again in the third quarter.

Key Quotes: 

“Data released this morning showed that the U.S. deficit in international trade in goods and services narrowed to $43.6 billion in June from $46.4 billion in May. Preliminary data released last week showed that the goods deficit narrowed in June, so today’s data release, which includes international trade in services, was more or less expected. That said, the overall trade deficit narrowed by about $1 billion more than the consensus forecast had anticipated.”

“The decline in the trade deficit in June was the combination of a $2.4 billion increase in exports of goods and services and a $396 million decline in imports.”

“The only weakness in exports came in consumer goods, which declined by $324 million. In general, export growth has turned positive again this year after its negative run through much of 2015 and 2016.”

“Stronger economic growth in most of America’s trading partners is helping to boost U.S. export growth this year. That said, we are skeptical that the supercharged rates of export growth, which characterized much of the past decade, lie immediately in store.”

“On the other side of the ledger, weakness in imports in June was due, at least in part, to lower petroleum imports, which were off $1.6 billion.”

“The advanced estimate of real GDP growth in Q2-2017, which was released last week, showed that real net exports contributed positively (0.2 percentage points) to overall growth in the second quarter. Today’s data show that real exports of goods ended the quarter on a strong note by rising 1.6 percent in June, following on the heels of the 0.9 percent gain registered in May.”