US goods trade deficit contracts less than expected in June

[WASHINGTON] The US trade deficit in goods narrowed in June amid a decline in imports, but the improvement was probably insufficient to prevent trade from again subtracting from economic growth in the second quarter.

The goods trade gap contracted 4.2 per cent to US$101.5 billion last month, the Commerce Department’s Census Bureau said on Tuesday (Jul 28). Economists polled by Reuters had forecast the goods deficit at US$100.0 billion.

Goods imports decreased US$8.2 billion to US$306.2 billion, but remaining elevated amid an artificial intelligence spending boom. The AI build-out is heavily dependent on imports. Exports of goods fell US$3.8 billion to US$204.7 billion.

The government is scheduled to publish its advance estimate of second-quarter gross domestic product growth on Thursday. A Reuters survey of economists estimates the economy grew at a 2.1 per cent annualised rate last quarter, which would match the first quarter’s pace.

Trade has subtracted from GDP for two straight quarters. Business spending on equipment, mostly reflecting AI investment, is expected to have been a key source of growth last quarter. REUTERS