The deficit narrowed by 11% to nearly $42.9 billion, the smallest it has been since late 2010. The deficit in May had been $48 billion, the Commerce Department report indicated. Exports increased to a record level on demand for industrial engines and autos. Imports were down by 1.5% to just under $228 billion from May’s $231.5 billion.
An economist in the U.S. said the narrowing of the budget was just an oil-related story. As the year goes forward, both exports and imports will cool off, and there is not expectation of trade changing much over for the third quarter, said the analyst.
The deficit, which was better than previously projected, may help increase growth figures for the second quarter when they are revised by the government in late August. The recent increase in oil prices plus the slowing of economies throughout Asia and Europe indicates the trade deficit will probably keep shrinking, making it harder for trade to help with economic expansion.
Estimates by economists had put the deficit in a range of between $44 billion and $50 billion. The May trade deficit was also revised by the Department of Commerce after initially being reported at $48.7 billion.
Oil prices increased, which has hurt the buying power of consumers in the U.S.