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Thursday, July 28, 2016

June Exports Improve, Imports Rise

Exports of goods improved in June though imports rose even more, making for a $63.3 billion goods deficit in the month. The mix will pull down tomorrow's second-quarter GDP report, where exports are a subtraction, but nevertheless is a welcome sign of strength in cross-border demand.

Exports rose 0.9 percent led by gains for foods and for consumer goods. Exports of capital goods, which have been weak, posted a solid monthly gain, also at 0.9 percent. The import side shows a big gain for industrial supplies where price inflation for oil is at play but also a 1.2 percent gain for capital goods imports and a second very strong gain for the leading component, consumer goods which rose 3.3 percent following May's 2.7 percent. Gains in imports of consumer goods point to business confidence in consumer demand.

Watch for the complete international trade report next Friday, a report that will include services where U.S. exports are very strong.


Recent History Of This Indicator:
Imports of petroleum, due to this year's upswing in oil prices, have been inflating the nation's goods deficit. When excluding petroleum, goods imports have mostly been on the rise including for consumer goods which, though a subtraction in the national accounts, points squarely at business confidence in U.S. retail expectations. Imports for capital goods, however, have been weak in further evidence of weakness in business confidence. Pointing unmistakably at trouble in global demand is weakness in exports including, like on the import side, for capital goods.

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