US Trade Deficit Shrinks
August 14, 2007
The trade deficit in the US economy has declined over the course of June according to official figures released today.
The trade deficit, which reflects the degree to which imports outweigh experts to the economy, has narrowed over June to the lowest deficit in four months.
Figures released today reflect a fall of over one and a half percent in the deficit between total imports and total exports in the US economy.
Strong exports in agriculture and car manufacturing are largely responsible for closing the gap on imports fuelled largely by crude oil and cheap manufacturing imports from the Far East, particularly China.
The deficit was announced to have fallen to $58.1 billion in June from $59.2 billion in May - a 1.7% fall in the gap.
Analysts had forecast a slight increase in the deficit over the course of the month, with the continuing high price of oil imports favoured to overtake any growth in output.
However, the growth in manufacturing and agriculture seems to have accelerated beyond even ambitious expectations to take the US economy closer to the black and a trade surplus.
Exports and imports through June were both recorded as record highs, whilst the high-profile deficit with China increased to the highest level this year, growing by 5.7% from the previous month.
The US have criticised Chinese measures to artificially weaken the yuan, which only serves to make Chinese imports more attractive to US markets.
Meanwhile exports across goods and services sectors were up to $134.5 billion over June, helping to drive down the gap which has led to a devaluation in the US currency.
Despite the narrowing trade deficit, the US Labor Department has intimated that the cost of production has increased by 0.6% over the month, driven largely by increasing fuel prices.
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