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Economy in Brief

U.S. Trade Deficit Improves With Lower Oil Prices
by Tom Moeller  August 9, 2012

Lower oil prices continue at the forefront of trade sector improvement.The U.S. June foreign trade deficit narrowed to $42.9B from $48.0B in May, initially reported as $48.7B. Expectations were for a deficit of $47.8B. Exports rose 0.9% (7.1% y/y) while imports fell 1.5% (+2.2% y/y) with lower oil imports. In chained 2005 dollars, the deficit in goods narrowed to $44.2B in June, its lowest since March 2010. Real exports rose 2.9% (11.3% y/y) but real imports slipped 0.3% (+3.3% y/y).

Total nominal imports fell 1.5% (+2.2% y/y) in June, down for the third straight months, as goods imports fell 1.8% (+1.6% y/y). The decline in oil prices to an average $100.13 per barrel helped lower the value of petroleum imports in June by 7.5% (-14.1% y/y). When adjusted for prices, petroleum imports increased 0.2% (-8.8% y/y).

Elsewhere, there was weakness in imports led by real capital goods which were off 2.6% (+8.8% y/y). Real nonauto consumer goods imports also fell by 1.2% (-2.8% y/y) while real imports of foods, feeds & beverages dropped 1.9% (-1.0% y/y).Offsetting these declines were real imports of autos & products which rose 2.8% (28.2% y/y). Real imports of industrial supplies & material increased 1.2% (-3.3% y/y) while real imports of other goods gained 1.0% (4.5% y/y). Finally, nominal imports of services rose 0.3% (5.1% y/y) as passenger fares rose 3.4% (14.5% y/y) but travel slipped 0.4% (+7.6% y/y).  

Overall U.S. exports increased 0.9% (7.1% y/y) and in real terms they rose 2.9% (11.3% y/y). Strength centered in real exports of nonauto consumer goods which rose 6.0% (5.1% y/y) while real exports of autos & parts increased 5.7% (15.9% y/y). Real exports of industrial supplies increased 5.0% (13.1% y/y) accompanied by a 0.4% uptick (9.5% y/y) in real capital goods exports. Services exports slipped 0.3% (+2.3% y/y) as travel exports were essentially unchanged (6.7% y/y) and passenger fares fell 1.1% (+6.4% y/y).

By country, the June goods trade deficit with mainland China deteriorated slightly m/m to $27.4B, its deepest since October. Exports to China increased 10.2% y/y while U.S. imports gained a lessened 4.5% y/y. With Japan, the deficit improved slightly to $6.0B as U.S. exports rose 10.9% y/y but U.S. imports soared 26.7% y/y. The deficit with the European Union eased to $8.4B with a 2.5% y/y gain in U.S. exports and a 2.0% y/y decline in imports.

The international trade data can be found in Haver's USECON database. Detailed figures are available in the USINT database. The expectations figures are from the Action Economics consensus survey, which is carried in the AS1REPNA.

The European Debt Crisis and the Dollar Funding Gap from the Federal Reserve Bank of New York is available here.

Foreign Trade Jun May Apr Y/Y 2011 2010 2009
U.S. Trade Deficit $42.9B $48.0B $50.6B $50.3B
$559.9B $494.7B $381.3B
Exports (%) 0.9 0.3 -0.9 7.1 14.2 16.7 -14.5
Imports -1.5 -0.8 -1.6 2.2 13.9 19.5 -23.0
  Petroleum -6.5 -8.8 -1.0 -13.0 30.8 32.5 -44.0
  Nonpetroleum goods -0.9 1.0 -2.0 5.8 12.1 20.8 -20.9
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