For all those Americans deploring the alarming state of their country's import-export trade deficit, June brought some good news. It unexpectedly narrowed by 4.1 per cent to $56.8 billion on record exports and a decline in non-oil imports even as oil prices soared to record highs, the US Commerce Department estimated yesterday. The measure had stood at $59.2 billion for the month of May.
Economists, who had estimated an increase in the gap to around $60 billion, were left surprised by the latest numbers. A weaker dollar has helped stoke American exports. The currency has slumped 24 per cent versus the euro in the past five years. It recouped some losses in the past four weeks as the outlook for Europe's economy dimmed.
Exports jumped 4 per cent in June to a record $164.4 billion, the biggest gain in four years. The percentage jump is the largest since February 2004 and was led by the nation's exports to Mexico, the European Union and South America all setting records.
Meanwhile, the month's imports rose 1.8 per cent to a record $221.2 billion, largely because of the record $117-a-barrel price for crude oil. The figures are seasonally adjusted but are not adjusted for price changes.
After adjusting for inflation, June's real trade deficit fell by 10.3 per cent to the lowest level in 6 1/2 years, as real exports rose 4 per cent and real imports dipped 0.6 per cent. Non-petroleum imports dropped 2.2 per cent in real terms.
The non-petroleum trade deficit fell to the lowest level in five years, the government said. The surprise improvement could mean the government will revise its estimate for second-quarter gross domestic product will from 1.9 per cent to close to 3 per cent, economists said.
The balance of trade has been declining for nearly two years, the result of the dollar slipping in value against other global currencies as well as weaker demand at home.
Exports have been keeping the economy afloat, as consumer spending, business investment and housing investment have slumped. Indeed, net exports contributed more to GDP in the second-quarter than at any time in the past 28 years.
The trade deficit with China, unadjusted for seasonal factors, widened to $21.4 billion in June from $21 billion the month before, but the deficit for the first six months of the year was essentially unchanged from the same period a year ago.
After rising at double digits every year for most of the past decades, imports from China are up just 4 per cent so far in 2008. Exports to China, meanwhile, have risen 20 per cent through the first six half of 2008. This is contrary to the stance adopted by some American lawmakers who accuse China of keeping its currency undervalued to boost exports.
The deficit with the Organization of Petroleum Exporting Countries (OPEC) expanded by $200 million to a record $18.1 billion. This was not unexpected considering the high prices oil had been hovering around that month. It is only recently that the upsurge has been reversed, with prices falling almost a quarter from their record highs.
US exports of goods increased 5.1 per cent to $116.7 billion in June, the government's data showed. Exports of services also rose, up 1.4 per cent to $47.7 billion. Exports of industrial materials increased 8.1 per cent to $36.9 billion and exports of foods and feeds climbed by 8.8 per cent to $10.5 billion, boosted by higher commodity prices.
The country exported a record $8.2 billion of petroleum. Exports of capital goods rose 3 per cent to $40.6 billion, led by airplane engines, generators and semiconductors. Exports of consumer goods increased 5.4 per cent to $14.1 billion. Exports of autos and auto parts rose 5.6 per cent.
Imports of goods increased 2 per cent to $186.7 billion. Imports of services rose 1 per cent to $34.5 billion. Imports of industrial materials increased 8.3 per cent on the month, reaching $72.7 billion. Petroleum imports increased to a record $44.5 billion, in line with the average price of imported crude oil rising by $10.85 a barrel to a price of $117.13.
Non-petroleum imports fell 1.4 per cent to $141.5 billion. Imports of autos and auto parts were little changed, up 0.3 per cent to $20.5 billion. Imports of capital goods fell 3.4 per cent to $38.4 billion, led by fewer computers, machines and semiconductors. Imports of consumer goods dropped 1.4 per cent to $41.3 billion, led by less apparel and fewer TVs and furniture. June's imports of foods and feeds fell 1.9 per cent to $7.5 billion.