Higher Consumer Demand, Energy Cost Fuel Imports
New York, NY — The U.S. trade deficit rose to a 10-month high in June as consumer demand and higher energy prices fueled imports, according to data released by the U.S. Department of Commerce .
The trade gap increased 8.7% to $44.5 billion in June, the biggest deficit since August 2015. May’s trade deficit was revised slightly down to $41.0 billion. (Source: “U.S. International Trade in Goods and Services,” U.S. Department of Commerce, August 5, 2016.)
Exports increased to $183.2 billion in June from $182.5 billion in May, while imports increased to $227.7 billion in June from $223.5 billion in May.
Imports increased 1.9% to $227.7 billion and purchases of consumer goods climbed by $1.87 billion, paced by pharmaceuticals and mobile phones. Demand for crude oil jumped by $1.43 billion.
June marked the third straight month of increases in the deficit. Economists polled by Reuters had forecast the trade gap widening to $43.1 billion in June after a previously reported $41.1 billion shortfall. When adjusted for inflation, the deficit rose to $64.7 billion from $60.9 billion in May. (Source: “U.S. trade deficit rises to ten-month high in June,” Reuters, August 5, 2016.)
The government, in its snapshot of second-quarter gross domestic product published last week, said trade had contributed two-tenths of a percentage point to the 1.2% annualized growth pace during the period.
The dollar’s sharp rally against the currencies of the United States’ main trading partners between June 2014 and December 2015 has undercut export growth.
Year-to-date, the goods and services deficit decreased $5.8 billion, or 2.3%, from the same period in 2015. Exports decreased $54.2 billion, or 4.7%. Imports decreased $60.0 billion, or 4.3%.
Exports to the European Union jumped 7.8%, with goods shipped to the United Kingdom soaring 18.2%. China bought more U.S.-made goods in June, with exports to that country rising 3.6%.
Imports of goods and services increased 1.9% to $227.7 billion in June, with oil prices accounting for part of the rise. Oil prices averaged $39.38 per barrel in June, the highest level since October of last year, from $34.19 in May. (Source: Ibid.)
June’s increase in imports also reflected a pickup in domestic demand. Imports from China increased 2.8%. With imports outpacing exports, the politically sensitive U.S.-China trade deficit rose 2.5% to $29.8 billion in June, the biggest gap since last November.