US JUNE TRADE DEFICIT SURPRISES, YET ANOTHER RECORD -$24.6B
By Joseph Plocek
WASHINGTON (MktNews) - The U.S. June trade deficit surged to a surprisingly wide -$24.6 billion, another monthly record and much worse than the -$20.5 billion median estimate in a Market News International poll of private economists.
The June trade report should be a drag on 2Q real GDP growth. The trade gap was about $4 billion wider than assumed in the prior 2Q GDP estimate made by the Commerce Department. Slower growth may be a plus for U.S. assets, so the deficit may not hurt the US$ much.
June imports soared $3.9 billion, or +3.9%, on jumps in capital goods (+$1.23 billion, mostly in computer-related items) and consumer goods (+$904 million, mostly in apparel and gem diamonds). These gains show a robust U.S. consumer and possibly some preparations for Y2K.
Imports of crude oil were $4.3 billion, their highest since November 1997, but up only $0.13 billion on the month. Most of the price effects of higher oil for the trade report appear to have fallen in May. The unit price of a barrel of oil was $14.54 in May but only $14.52 in June.
June exports gained $0.4 billion, mostly due to re-exports of autos. Automobile-related items were up $0.4 billion, and the Commerce Department said exports of vehicles, parts, and engines were $6.5 billion, a high since July 1997.
Country trade deficits continue to suggest Asia is filling demand. Japan's deficit jumped to -$6.3 billion from -$5.3 billion in May, arguing for Yen appreciation. The last time the deficit with Japan was higher was March 1999 at -$6.5 billion.
The deficit with China was -$5.7 billion, versus -$5.3 billion in May. The trade deficit with the NICs was -$2.4 billion versus -$1.95 billion in May.
The record June trade deficit should be surprising only in its magnitude. So far in 1999, the trade gap has exceeded expectations in every month except April. The average difference from expectations is $2.0 billion in those four months. The overage for June was a shockingly huge $4.1 billion. |
