RTTNews - While the Commerce Department released a report on Wednesday showing that the U.S. trade deficit widened in the month of June compared to the previous month, the deficit for the month still came in narrower than economists had been anticipating.
With imports increasing at a faster pace than exports, the report showed that the trade deficit widened to $27.0 billion in June from $26.0 billion in May. Economists had been expecting a somewhat more significant increase in the size of the deficit to $28.7 billion.
The increase in the size of the deficit came as the value of imports increased by 2.3 percent to $152.8 billion in June from $149.3 billion in May. This outpaced the increase in the value of exports, which rose 1.9 percent to $125.8 billion from $123.4 billion in the previous month.
Additionally, the Commerce Department noted that the goods deficit widened to $38.4 billion in June from $37.2 billion in May, while the services surplus rose to $11.4 billion from $11.3 billion.
The report also showed that the politically sensitive trade deficit with China widened to $18.4 billion in June from $17.5 billion in May.
While Peter Boockvar, equity strategist for Miller Tabak, said the narrower than expected deficit may contribute positively to second quarter GDP, it would just partially offset the bigger than expected drop in June inventories.
On Tuesday, the Commerce Department released a report showing that wholesale inventories fell 1.7 percent in June following a revised 1.2 percent decrease in May. Economists had expected inventories to fall 0.9 percent compared to the 0.8 percent drop originally reported for the previous month.
Overall, Q2 GDP will likely be revised lower from the initial reading of -1% by maybe 5 tenths or so, Boockvar predicted.
Further trade-related data will be released on Thursday, with the Labor Department scheduled to release its report on import and export prices in the month of July.
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