The US trade deficit shrank unexpectedly in June as a weak dollar stoked exports, offsetting record crude oil imports and a politically sensitive growing gap with China, official data showed on Tuesday.
The June trade deficit shrank a hefty 4.1 percent to US$56.8 billion, the smallest gap since March, the US Commerce Department said.
It was the second consecutive month the trade gap narrowed and overturned market expectations it would swell to US$61.9 billion.
The Commerce Department adjusted the May trade deficit downward to US$59.2 billion from its initial estimate of US$59.8 billion.
“The weak dollar has become a major driver of economic growth,” Joel Naroff of Naroff Economic Advisers said.
“The dollar is probably where it should be as it has made US products competitive in a world where global trade is central to economic growth,” he said.
The weak dollar in June helped lift exports 4 percent to US$164.4 billion, while imports rose a modest 1.8 percent to US$221.2 billion as the world’s largest economy faced housing and financial headwinds.
Economists said the surprising robust trade data should lead to an upward revision of second-quarter gross domestic product growth, which was initially estimated at 1.9 percent.
“US growth is doing much better than domestic spending would indicate, both because exports are booming and because some of the weakness in domestic demand is being passed on to the rest of the world through lower imports,” said Nigel Gault, an economist at Global Insight.
Crude oil and Chinese imports accounted for almost the entire June trade deficit.
At a record US$117.13 a barrel on average, the oil deficit hit US$36.4 billion, a record high that represented more than half the trade deficit.
Oil prices, which had surged since February last year, when a barrel was worth US$50.64, have fallen recently, which should ease pressure on US imports.
By contrast, the trade deficit in non-petroleum products was the smallest since February 2003.
The trade gap with China rose 1.8 percent to a seasonally adjusted US$21.4 billion from US$21.0 billion in May. Critics accuse China of manipulating its currency to unfairly maintain a trade advantage that has cost thousands of US jobs.
The US reduced imports in nearly all categories, except commodities, and exported record amounts of industrial supplies and materials, food and beverage products and consumer goods.
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