U.S. exports of goods and services increased by 0.9 percent in June compared to the previous month, with a strong performance in exports of goods, which increased by $1.8 billion. Meanwhile, exports of services dropped by $0.2 billion. The increase in exports of goods was almost across the board, with a $0.9 billion gain in consumer goods, $0.7 billion increase in automotive vehicles, parts and engines, $0.6 billion rise in industrial supplies and materials and $0.2 billion increase in both other goods and capital goods. The only segment that showed a negative performance during the month was a decrease of $0.8 billion in foods, feeds and beverages. Exports of agricultural and food products has still not benefited from the surge in agricultural and food prices that has occurred over the past several months due to the drought in the United States. We should expect this segment to post advances in the months to come. What was most surprising was that June’s exports of goods were also very strong compared to the same month the previous year. This would point to a world economy that is stronger today than what it was a year ago, which would suggest that this result is probably going to be revised downward in the future. However, overall economic conditions do not show much support for strength.
Imports Come in According to Plan
As expected, total imports came down 1.5 percent in June compared to May. Imports of goods dropped a whopping $3.6 billion while imports of services declined another $0.1 billion. Industrial supplies and materials dropped the most, $2.3 billion, capital goods down $1.3 billion, consumer goods by $0.6 billion and foods, feeds and beverages another $0.2 billion. Increases were seen in imports of automotive vehicles, parts and engines, whose value increased $0.6 billion, while other goods increased $0.1 billion. Most of the decrease in imports was due to the decrease in oil prices.
Trade Balance Improvement to Benefit Second Quarter GDP
June’s strong drop in the trade balance, from $48.0 billion in May to $42.9 billion, by itself, would add about 0.1 percentage point to the initial 1.5 percent print. While this addition to GDP is very small, the U.S. economy can use all the help it can get, and this is certainly good news for the second quarter GDP results. However, the decrease in imports is also showing, despite the strong decrease in petroleum imports, that the U.S. economy remains weak. On the positive side, the strong performance of capital goods and automotive vehicles and parts exports in June compared to last year could be an indication that the U.S. manufacturing sector may be hanging in there.