Ending in June, the US trade deficit fell by 22.4% to $34.2bn (£22.3bn) which is the smallest gap since October 2009. Thus, with the sharp fall in the U.S. trade deficit in the second quarter, the country’s economy is on the right track. Moreover, the latest data suggests for a sustained trend toward economic recovery for a country which is riling under massive unemployment.
The U.S. recorded trade deficit fall by 22.4% to $34.2bn (£22.3bn) in June. It is a significant improvement as the country has reached the smallest gap since October 2009. Similarly, the percentage contraction was also the largest since February 2009. According to economists, the smaller trade deficit could lead the government to revise economic growth for the next quarter.
Oil Boom, a Major Contributor for fall in Trade Deficit
Whereas imports of fuel oil and petroleum products fell, the U.S. saw strengthening of the domestic energy industry. The country also reported growth in the exports of fuel oil and petroleum products. Nonetheless, analysts also say that when calculated in 2009 dollars, the trade deficit in petroleum products fell by almost $2.2 billion from May to $10.23 billion.
On the other hand, the trade deficit in non-petroleum products fell by $5.93 billion to $37.38 billion. The U.S. also recorded narrowing trade deficits against the European Union and China, the two major partners. Experts claim that the fall in the trade deficit against the European Union and China can be attributed to their relatively slow growth.
The Commerce Department’s Estimates
The Commerce Department of the U.S. revealed that the trade gap fell more than 22% during the month of June, to $34.2 billion from $44.1 billion which according to it is due to exports which notched the sharpest rise since September 2012. It hit the highest level after adjusting for inflation. On the other hand, imports fell in part as the country bought comparatively fewer foreign-made consumer goods and equipment.
Trade Balance against China
In the month of June, the U.S. imports from China fell and exports moved up. The U.S. has a trade deficit with China as it imports far more from the country than it exports. The decline in the U.S. imports may be due to softening in demand as reportedly, China is trying to rebalance its economy by focusing more on domestic consumption than exporting.
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