U.S. Trade Deficit Narrows in June as Exports Jump 2X Imports; Trade Still Well Below Pre-COVID Levels

• Trade Deficit declines to $50.7 billion in June.

• Exports rebound 9.4%; Imports rise 4.7%.

• Exports remain 25.3% below February level; imports down 15.2%.

The U.S. trade deficit in goods and services narrowed to $50.7 billion in June from an upwardly-revised $54.8 billion in May (was $54.6 billion). The Action Economics Forecast Survey anticipated $50.2 billion. Exports jumped 9.4% (-24.4% year-over-year), while imports increased 4.7% (-19.9% y/y). Even with these monthly gains exports remain 25.3% below February levels while imports are down 15.2% (February 2020 was not the peak in both exports and imports, those occurred in 2018). Trade was a small bright spot in last week's Q2 GDP report, adding 0.68 percentage points to GDP growth. Today's data suggests a slight downward revision to that figure.

The nominal deficit in goods trade narrowed to to $71.0 billion in June from $75.4 billion. The advanced trade data reported last week had a $70.6 billion goods deficit. Exports of goods jumped 14.3% (-23.7% y/y) as automotive exports soared 144.3% (-38.4% y/y). Imports of goods rose 5.1% (-16.9% y/y) also driven by a 107.8% gain in auto imports (-42.2% y/y). Petroleum imports gained 16.9% (-57.4% y/y) predominantly the result of rising oil prices (petroleum import volumes were up just 0.4% in June; -14.2% y/y). Non-petroleum imports grew 4.7% (-13.5% y/y). The real (inflation-adjusted) goods trade balance narrowed to $81.0 billion (chain-weighted 2012$) in June from $86.2 billion in May.

The surplus on trade in services edged up to $21.5 billion from slightly downwardly revised $21.4 billion (was $21.5 billion). The value of services exports grew 1.0% (-24.9% y/y) led by a 13.9% gain in transport services (-54.9%). Imports of services grew 1.4% (-32.4% y/y) also led by transport (+8.9% month-on-month; -54.3% y/y). Services exports are down 24.6% since February, while imports have fallen by 29.6% (the peaks in services trade occurred in 2019).

The politically-sensitive goods trade deficit with China narrowed to 26.7 billion in June from $27.9 billion. Both exports and imports to China fell 6.3% and 4.7% respectively (+0.1% and -7.3% y/y). The trade deficit with the European Union ticked widened to $13.1 billion while the imbalance with Japan narrowed to -1.8 billion.

The international trade data, including relevant data on oil prices, can be found in Haver's USECON database. Detailed figures on international trade are available in the USINT database. The expectations figures are from the Action Economics Forecast Survey, which is carried in AS1REPNA.