The US trade deficit narrowed sharply in June to its lowest level in more than 3-1/2 years as imports fell and exports touched a record high, suggesting an upward revision to second-quarter growth.
The Commerce Department said yesterday the trade gap fell 22.4% to $34.2bn, the smallest since October 2009. The percentage decline was the largest since February 2009.
May’s shortfall on the trade balance was revised to $44.1bn from the previously reported $45.0bn.
Economists polled by Reuters had expected the trade deficit to narrow only to $43.5bn in June. When adjusted for inflation, the trade gap narrowed to $43.2bn, the smallest since January 2010, from $51.9bn in May.
The smaller so-called real trade deficit in June suggests the government could raise its initial second-quarter gross domestic product growth estimate, published last week.
“All else being equal, this could mean a net upward revision worth about 0.8 percentage points and take second-quarter growth to 2.5%,” said Tim Quinlan, an economist at Wells Fargo Securities in Charlotte, North Carolina.
Trade subtracted 0.8 percentage point from second-quarter GDP growth, according to the first government estimate. The economy expanded at an annual rate of 1.7%, stepping up from the first-quarter’s 1.1% pace.
Belt-tightening in Washington and weaker global demand weighed on the US economy in the first half of the year, but analysts expect activity to regain momentum for the rest of 2013 as the fiscal policy burden eases and growth in Europe picks up.