Trade Gap Wider Than Expected In June

A rise in imports made for a slightly wider-than-expected trade gap in June of $43.8 billion. Imports rose 1.2 percent reflecting a rise in petroleum imports that drove the petroleum goods gap to $7.3 billion from $5.7 in billion in May. Exports softened slightly in June, down 0.1 percent and including another decline for capital goods and also a decline for industrial supplies. The goods gap came in at $63.5 billion in June, well up from last week's advance reading of $62.3 billion which accounts for the upward miss in expectations.

A plus in the report is another strong surplus for services, unchanged from May at $19.7 billion. Another plus is a $1 billion revision in May's gap to $40.9 billion from $41.9 billion.

By country, the gap with China rose $1.0 billion to $31.5 billion while the EU gap rose $2 billion to $14.5 billion. The gap with Japan narrowed slightly to $5.2 billion while the gap with Mexico widened by $1.5 billion to $6.1 billion in the month. The balance with Canada, which for the first time since 1990 saw a surplus in May, fell back into deficit, at $2.5 billion in the month.

Continued weakness in goods exports is a major concern for the manufacturing sector which is struggling right now with weak foreign demand. For the revision outlook for second-quarter GDP, the revision to May's deficit should offset the greater-than-expected widening in June.

Recent History Of This Indicator:
The international trade report is expected to show a widening of the nation's trade gap to $43.0 billion from May's $41.9 billion. The strength of the dollar is at play in this report, boosting imports and depressing exports with the latter a major issue right now for the factory sector. In a special positive, watch for continuing declines in the petroleum gap which, due to rising domestic oil production and rising exports of fuels, is at a 13-year low.