WASHINGTON (MNI) - U.S. June trade data produced a huge surprise, with the trade gap narrowing to -$34.2 billion, its best showing in more than four years, and far better than expectations. This implies further demand for U.S. goods that will boost GDP estimates.
The June result was far better than the approximately -$42.3 billion that the Commerce Department assumed in the Q2 GDP calculation and better than the median estimate in a MNI poll of economists for -$43.2 billion. It was the smallest gap since February 2009, and about two-thirds of the betterment stemmed from non-oil items.
Imports fell $5.8 billion, reversing May's surge, and exports jumped $4.1 billion -- a sweet combination for growth. The June petroleum deficit was -$17.4 billion, the lowest since August 2009 as petroleum imports fell to their lowest since November 2010.
Crude quantity imported was about 2.5% lower on the month (a usual seasonal move) and pricing was up nine cents per barrel on average.
Imports included -$2 billion for oil, -$1.5 billion in cell phones (after +$1.9 billion in May), and -$546 million in gem diamonds. Autos fell $296 million, and other goods fell $1.2 billion.
Exports demand was centered in a few categories. It included +$1.9 billion oil-related items, +$428 million aircraft engines (perhaps a result of Boeing Corp. repairing jumbo jets), +$322 million in telecommunications equipment, and +$1 billion in jewelry-diamonds (this reversed May's -$1.2 billion). Real-dollar exports overall hit a record high.
The unadjusted trade balance by country included: China at -$26.7 billion after -$27.9 billion in May, Japan -$5.5 billion after -$5.4 billion, and OPEC -$5.8 billion after -$6.3 billion. The trade balance with North America was -$6.4 billion after -$7.2 billion, and with the EU -$7.1 billion after -$10.8 billion, with Germany and Ireland notably narrower on lower imports.
Real trade data for Q2 now shows the trade gap stands slightly smaller than the Q1 average and will add to GDP. Expect Q2 GDP estimates to be upped by at least 0.3 point on the trade report.
