June 2017 Trade Balance
Submitted by Atlas Indicators Investment Advisors on August 8th, 2017
June 2017 Trade Balance
America’s trade deficit improved in June 2017 according to the latest release from the Bureau of Economic Analysis. The chasm was down roughly $2.7 billion from May’s revised tally of $46.4 billion (originally $46.5 billion). Compared to a year earlier, the deficit decreased 0.4 percent. However, on a year-to-date basis, America’s trading shortfall is up 10.7 percent! For some context, our nation’s deficit improved versus a year earlier during June 2016. Notwithstanding the challenging year-to-date figures, both goods and services contributed positively to the monthly improvement.
Goods helped the tally as exports increased and imports fell. Foreign buyers of capital goods spent $800 million more in the period. Auto related exports increased $400 million as did pharmaceutical preparations. Led by a $1.4 billion decrease in crude oil, imports of industrial supplies declined. Americans purchased fewer foreign consumer goods, while they increased purchases of imported vehicles.
Service exports increased $600 million to $61.0 billion in June as imported services remained virtually unchanged at $43.8 billion. Travel increased $300 million. Transport, which includes freight and port services, managed an uptick of $100 million. Finally, financial service firms joined in the upward move as they collected an additional $100 million in revenues from foreign clients.
June’s improving trade related data should have a positive effect on the revised gross domestic product (GDP) due out later this month. Net exports are added to the other components of the economy, and it appears that the trade gap used in the first estimate of second quarter 2017 GDP was too large (i.e. it subtracted too much). Look for more on this in a subsequent note, but it seems more likely than not that our nation’s output was better than first thought from April through June.
