By Kasra Kangarloo
WASHINGTON (MNI) – The U.S. trade deficit, which widened
unexpectedly in June and effected a downward revision in second quarter
GDP, is forecast to narrow again in July.
According to a survey of economists by Market News International,
the July trade balance report is expected to show a deficit back
to area of $46.8 billion from $49.9 billion in the previous report.
Paul Dales, economist at Capital Economics, said that import growth
in recent months has been “suspiciously strong” compared to what survey
data has suggested, and as such should be weaker this month.
Russell Price, economist at Ameriprise Financial Inc, said that the
trade balance is expected to moderate due to limited U.S. demand, which
should be reflected in the nations appetite for imports.
The imports sector posted an unexpected gain in June, bringing the
trade deficit from $42 billion in May to $49.9 billion, an 18.8%
increase and the largest monthly dollar change on record. Exports posted
a decline of $2.4 billion, while imports rose by $5.9 billion.
The swing resulted in a sharp downward reduction to GDP for the
second quarter, revised from a 2.4% annualized rate of growth to 1.6% in
the Commerce Departments second report for the quarter. The trade
balance deducted 3.37 percentage points from total GDP in the second
report, more than twice the value of the total figure.
Preliminary data for July trade includes steel imports from the
Census Bureau, which totaled $2.3 billion following $1.9 billion in
June, and weekly gasoline prices from the Energy Information
Administration, which were roughly unchanged from June. Energy imports
comprised about 16% of the value total of goods imports in June.
— Kasra Kangarloo is a reporter for Need to Know News in Washington
** Market News International Washington Bureau: 202-371-2121 **