Trade Deficit Narrows in June
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WASHINGTON — The U.S. trade deficit eased in June, reduced by an increase in exports to countries with growing economies that counteracted rising oil prices.
The nation’s shortfall in international trade of goods and services narrowed by 0.3% to $64.80 billion from $64.97 billion in May, the Commerce Department said yesterday. Analysts said the number would have minimal effect on gross domestic product in the second quarter.
Sales abroad by companies in America climbed, even though aircraft exports dipped. Overall American exports increased by 2.0% to $120.74 billion in June.
“It’s the second consecutive month of decent growth in exports,” a Wachovia Corp. global economist, Jay Bryson, said. “That reflects decent economic growth overseas.”
The volume of crude oil imports swelled again, up to 330.86 million barrels from 323.83 million. The average price of a barrel of crude also rose, 30 cents higher to a record $62.04. As a result, the value of crude oil imports increased in June to $20.53 billion from $19.99 billion.
Overall purchases from abroad climbed 1.2% to $185.55 billion in June from $183.37 billion.Imports of cars and consumer goods rocketed higher. But a Global Insight economist, Brian Bethune, doesn’t expect such huge gains in those two categories going forward.
“Overall, we continue to expect a gradual improvement in the underlying trade balance (excluding imports of energy products) as consumption spending in the second half of 2006 eases back, while overseas demand for capital goods exports is expected to remain fairly robust,” Mr. Bethune wrote. “Nevertheless, the short-term trade balance in July and August will be adversely affected by higher crude oil and natural gas prices.”
As for its effect on economic growth, a High Frequency Economics analyst, Ian Shepherdson, labeled the June trade gap figure neutral. “Data imply only a 0.1% upward revision to Q2 GDP,” he wrote.
A separate, Labor Department report showed new jobless claims increased by 7,000 to a seasonally adjusted 319,000 last week. The number of workers drawing unemployment benefits for more than a week grew in the week ending July 29, the latest week for which such data are available.These continuing jobless claims increased by 48,000 to 2,480,000.
“Given that the latest reading was within the prevailing range of 305,000 to 320,000 and that the less-volatile four-week moving average fell to 309,000, around the level seen prior to the auto plant closings, it seems that the underlying pace of layoffs remains steady,” RBS Greenwich Capital Markets economist Omair Sharif said.