| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Balance | $-61.5B | $-72.6B to $-60.0B | $-60.2B | $-71.5B | $-71.7B |
Highlights
The international trade deficit continues to show the impact of unsettled policy on trade and tariffs, although the volatility has lessened from earlier in the year. Nonetheless, it will take a period in which trading partners are more certain of the costs of doing business with the US and vice versa before the underlying conditions in international trade are better understood in the new circumstances.
The international trade balance in goods and services is a deficit of $60.2 billion in June after a deficit of $71.7 billion in May which is an upward revision from the prior month. The June level is narrower the consensus of a deficit of $61.5 billion in the Econoday survey of forecasters. The trade balance for goods-only is a deficit of $85.9 billion in June, down 11.7 percent from May. The trade balance for services-only is a surplus of $25.7 billion in June, up 0.2 percent from May. In June, both exports and imports of goods and services were down, with imports particularly showing decreased demand for imported goods.
Total exports of goods and services are down 0.5 percent in June from May to $277.3 billion. Exports of goods are down 0.7 percent in June from the prior month to $179.1 billion. There is a decrease of $4.8 billion in industrial supplies and materials, and increases of $2.0 billion in capital goods and $1.0 billion in consumer goods. Exports of services are down 0.2 percent in June from the prior month to $98.2 billion due to a dip of $0.2 billion in travel.
Total imports of goods and services are down 3.7 percent in June from May to $337.5 billion. Imports of goods are down 4.5 percent in June from the prior month to $265.0 billion. Goods imports have declines of $8.4 billion in consumer goods, $2.7 billion in industrial supplies and materials, and $1.3 billion in automotive. Imports of services are down 0.3 percent in June from the prior month to $72.5 billion. Imports of travel and transport are both down $0.2 billion, while other business services are up $0.1 billion.
The trade deficit with China is down to $9.506 billion in June compared to $13.941 billion in May. The trade deficit with Japan is up to $5.164 billion after $4.879 billion in May. The deficit with Canada is narrower at $1.313 billion after $2.056 in the prior month. The deficit with Mexico is also smaller at $16.770 billion from $18.165 billion.
A narrower trade deficit in June means that net exports in the GDP data for the second quarter will continue to have an outsized contribution to growth when the second estimate is released at 8:30 ET on Thursday, August 28.
The international trade balance in goods and services is a deficit of $60.2 billion in June after a deficit of $71.7 billion in May which is an upward revision from the prior month. The June level is narrower the consensus of a deficit of $61.5 billion in the Econoday survey of forecasters. The trade balance for goods-only is a deficit of $85.9 billion in June, down 11.7 percent from May. The trade balance for services-only is a surplus of $25.7 billion in June, up 0.2 percent from May. In June, both exports and imports of goods and services were down, with imports particularly showing decreased demand for imported goods.
Total exports of goods and services are down 0.5 percent in June from May to $277.3 billion. Exports of goods are down 0.7 percent in June from the prior month to $179.1 billion. There is a decrease of $4.8 billion in industrial supplies and materials, and increases of $2.0 billion in capital goods and $1.0 billion in consumer goods. Exports of services are down 0.2 percent in June from the prior month to $98.2 billion due to a dip of $0.2 billion in travel.
Total imports of goods and services are down 3.7 percent in June from May to $337.5 billion. Imports of goods are down 4.5 percent in June from the prior month to $265.0 billion. Goods imports have declines of $8.4 billion in consumer goods, $2.7 billion in industrial supplies and materials, and $1.3 billion in automotive. Imports of services are down 0.3 percent in June from the prior month to $72.5 billion. Imports of travel and transport are both down $0.2 billion, while other business services are up $0.1 billion.
The trade deficit with China is down to $9.506 billion in June compared to $13.941 billion in May. The trade deficit with Japan is up to $5.164 billion after $4.879 billion in May. The deficit with Canada is narrower at $1.313 billion after $2.056 in the prior month. The deficit with Mexico is also smaller at $16.770 billion from $18.165 billion.
A narrower trade deficit in June means that net exports in the GDP data for the second quarter will continue to have an outsized contribution to growth when the second estimate is released at 8:30 ET on Thursday, August 28.
Market Consensus Before Announcement
The trade gap in goods and services is expected at $61.5 billion for June after the goods trade deficit dropped to $86.0 billion in June amid falling imports.
Definition
Updating the goods portion of the advance report and offering initial data on services, this report provides complete information on cross-border trade. Merchandise trade is available by export, import and trade balance for six principal end-use commodity categories and for more than one hundred principal commodity groupings. Data are also available for 48 countries and 7 geographic regions. Detailed information is reported on oil and motor vehicle imports. Services trade is available by export, import and trade balance for seven principal end-use categories.
Description
Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect the value of the dollar in the foreign exchange market.
Imports indicate demand for foreign goods and services here in the U.S. Exports show the demand for U.S. goods in countries overseas. The dollar can be particularly sensitive to changes in the chronic trade deficit run by the United States, since this trade imbalance creates greater demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation. This report gives a breakdown of U.S. trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.
Importance
The international trade balance on goods and services is the major indicator for foreign trade. While the trade balance (deficit) is small relative to the size of the economy (although it has increased over the years), changes in the trade balance can be quite substantial relative to changes in economic output from one quarter to the next.
Interpretation
Market reaction to this report is complex. Typically, the smaller the trade deficit, the more bullish for the dollar. Also, stronger exports are bullish for corporate earnings and the stock market.
Both the level and changes in the level of international trade indicate relevant information about the trends in foreign trade. Like most economic indicators, the trade balance is subject to substantial monthly variability, especially when oil prices change. It is more appropriate to follow either three-month or 12-month moving averages of the monthly levels.
It is also useful to examine the trend growth rates for exports and imports separately because they can deviate significantly. Trends in export activity reflect both the competitive position of American industry and the strength of domestic and foreign economic activity. U.S. exports will grow when: 1) U.S. product prices are lower than foreign product prices; 2) the value of the dollar is relatively weaker than that of foreign currencies; 3) foreign economies are growing rapidly.
Imports will increase when: 1) foreign product prices are lower than prices of domestically-produced goods; 2) the value of the dollar is stronger than that of other currencies; 3) domestic demand for goods and services is robust.
The international trade report does show bilateral trade balances with our major trading partners. Since the value of the dollar versus various foreign currencies does not always move in tandem, we can see a narrower or wider trade deficit with different countries. In the 1980s and 1990s, the U.S. trade deficit with Japan often caused political problems. During the next 20 years the deficit with China began to grow rapidly and, like Japan, once again caused political problems. While American consumers benefit from weak imports, American workers often lose their jobs as these goods are no longer produced in the United States. Ideally, the United States would be exporting (high end) goods that other countries don't produce.
Imports indicate demand for foreign goods and services here in the U.S. Exports show the demand for U.S. goods in countries overseas. The dollar can be particularly sensitive to changes in the chronic trade deficit run by the United States, since this trade imbalance creates greater demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation. This report gives a breakdown of U.S. trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.
Importance
The international trade balance on goods and services is the major indicator for foreign trade. While the trade balance (deficit) is small relative to the size of the economy (although it has increased over the years), changes in the trade balance can be quite substantial relative to changes in economic output from one quarter to the next.
Interpretation
Market reaction to this report is complex. Typically, the smaller the trade deficit, the more bullish for the dollar. Also, stronger exports are bullish for corporate earnings and the stock market.
Both the level and changes in the level of international trade indicate relevant information about the trends in foreign trade. Like most economic indicators, the trade balance is subject to substantial monthly variability, especially when oil prices change. It is more appropriate to follow either three-month or 12-month moving averages of the monthly levels.
It is also useful to examine the trend growth rates for exports and imports separately because they can deviate significantly. Trends in export activity reflect both the competitive position of American industry and the strength of domestic and foreign economic activity. U.S. exports will grow when: 1) U.S. product prices are lower than foreign product prices; 2) the value of the dollar is relatively weaker than that of foreign currencies; 3) foreign economies are growing rapidly.
Imports will increase when: 1) foreign product prices are lower than prices of domestically-produced goods; 2) the value of the dollar is stronger than that of other currencies; 3) domestic demand for goods and services is robust.
The international trade report does show bilateral trade balances with our major trading partners. Since the value of the dollar versus various foreign currencies does not always move in tandem, we can see a narrower or wider trade deficit with different countries. In the 1980s and 1990s, the U.S. trade deficit with Japan often caused political problems. During the next 20 years the deficit with China began to grow rapidly and, like Japan, once again caused political problems. While American consumers benefit from weak imports, American workers often lose their jobs as these goods are no longer produced in the United States. Ideally, the United States would be exporting (high end) goods that other countries don't produce.
