June 2018 Balance of Trade

America’s trade deficit widened in June according to the Bureau of Economic Analysis.  Increasing to $46.3 billion, this shortfall jumped 7.3 percent in the period.  Year-to-date, our nation’s trading gap has widened $19.6 billion or 7.2 percent versus the same period in 2017.  Both sides of the ledger worsened for the U.S.

June exports fell to $213.8 billion, a decline of $1.5 billion.  Consumer goods declined $1.4 billion as fewer American pharmaceutical preparations and jewelry were purchased by foreign buyers.  Businesses wanted less as well, causing foreign purchases of capital goods made in the U.S. to decline $900 million.  Exports of passenger vehicles, parts, and engines dropped $700 million also.  However, there was an uptick in American-made industrial supplies purchased by our trading partners.

Simultaneously, Americans purchased more foreign-made goods and services as imports increased $1.6 billion to $260.2 billion.  Imports of consumer goods increased $2.0 billion and industrial supplies were higher by $900 million.  Countering these upticks, businesses were less enthusiastic about foreign-made capital goods which fell $1.5 billion. 

America’s services surplus continues, but it was virtually unchanged from a month earlier.  Exports of services increased $200 million led by the $100 million uptick in financial services.  Imported services rose $200 million as well, skewed by charges for intellectual property rights which were up $300 million alone, due to payments for broadcasting rights to the 2018 World Cup.

This trade deficit deterioration will likely hurt the upcoming revision of gross domestic product (GDP).  Second quarter 2018 data is still being collected, so two revisions are the norm.  June’s rising deficit may not have been accurately represented when the first GDP estimate was made.  Fortunately, this is not a substantial uptick and is unlikely to upset the applecart much, if at all.