US trade gap narrows to US$50.7b in June on rising exports

[WASHINGTON] The US trade deficit dropped slightly in June to US$50.7 billion on a record increase in exports, the government announced Wednesday.

The US$4.1 billion decline in the trade gap from May came from a 9.4 per cent jump in exports of goods and services, the largest on record, while imports rose just 4.7 per cent, the Commerce Department reported.

In the first half of the year, the trade gap narrowed sharply from the same period of 2019 amid the global shutdowns in transportation and trade due to the Covid-19 pandemic, dropping to US$274.3 billion from US$297.4 billion, according to the data.

At the same time the deficit with China in goods trade has narrowed sharply, falling to US$142.2 billion through June, more than US$40 billion lower than in the first half of 2019.

The Commerce Department said it could not quantify or separate the impact of the pandemic on the trade data. But that slowdown is not necessarily good news given the implications for business activity.

"Trade flows have been weak and will likely remain restrained owing to a weak global growth backdrop and subdued demand at home and abroad," said Rubeela Farooqi, chief US economist at High Frequency Economics.

James Watson of Oxford Economics warns that "total trade activity is still stuck 20 per cent below its February peak", and "with activity still globally depressed and the US recovery showing signs of weakness, downside risks are significant".

AFP