The Census Bureau reported a sharp drop in the U.S. trade deficit, down from $44.1 billion in May to $34.2 billion in June. This was the lowest monthly deficit since October 2009. June’s lower deficit was the result of increased goods exports (up from $130.3 billion) and fewer good imports (down from $193.2 billion to $187.4 billion). This was welcome news, particularly with goods exports hitting an all-time high. At the same time, the service sector surplus was virtually unchanged, up from $18.8 billion to $18.9 billion.
The lower trade deficit stemmed from a narrowing of the deficits for both petroleum and non-petroleum goods, another positive sign. The petroleum trade deficit fell from $20.8 billion to $17.4 billion, but the larger change was in the non-petroleum deficit, down from $41.3 billion to $34.4 billion.
Looking more closely at the goods export categories, the largest increases were seen among the industrial supplies and materials (up $1.5 billion), non-automotive capital goods (up $1.5 billion), consumer goods (up $1.0 billion), and foods, feeds and beverages (up $343 million) sectors. The automotive vehicle sector had the only decline for the month, down by $439 million.
On a year-to-date basis, consumer goods (up $4.6 billion), non-automotive capital goods (up $2.8 billion), and automotive vehicles and parts (up $1.6 billion) had the greatest gains in the first six months of 2013 relative to the same time period in 2012.
Despite the better numbers in June, growth in exports for manufactured goods remain stubbornly slow so far this year. Year-to-date manufactured goods exports totaled $588.5 billion through June 2013 (not seasonally adjusted), or just 1.1 percent more than the $581.8 billion observed in 2012. This continues to be a disappointing figure, representing a slow-down from the 5.5 percent growth rate seen in 2012 and the 15 percent needed for the U.S. to meet its goal of doubling exports by 2015.
Reduced exports to Europe help to explain the reduced pace of trade in 2013. Year-to-date exports to Europe were $164.2 billion in 2013, lower than the $170.8 billion noted in 2012. On the positive side, there were modest increases in exports to our largest trading partners: Canada ($150.6 billion vs. $148.2 billion), Mexico ($110.7 billion vs. $106.1 billion), and China ($55.1 billion vs. $52.9 billion). Still, it is clear that the growth rates in exports to these countries have eased this year, as well.