Trade deficit rises modestly in June

UPDATED:

The U.S. trade deficit increased slightly in June as imports rose for the first time in 11 months and exports advanced for the second month in a row.

The jump in imports was due mostly to increases in oil prices and the volume of petroleum imports, while the rise in exports may signal that the world economy finally is recovering from the deepest global recession since the Great Depression.

The trade deficit edged up to $27 billion in June after having plunged to $26 billion in May, the lowest level in nearly a decade, the Commerce Department reported Wednesday. The trade deficit in June 2008 was $60.2 billion.

Imports increased $3.5 billion to $152.8 billion in June, while exports climbed $2.4 billion to $125.8 billion.

“Strengthening economic growth in some of our major trading partners may account for the recent rise in exports,” said Jay Bryson, global economist for Wells Fargo.

The price of imported oil jumped nearly $8 per barrel to $59.17 in June. Imported petroleum, including crude oil, increased from 10.9 million barrels per day in May to 12.3 million barrels per day in June. Altogether, the import bill for energy-related petroleum products increased from $17.7 billion in May to $22.4 billion in June.

The value of imported passenger cars soared 32 percent in June, while imports of other consumer goods declined.

Animal feeds, soybeans, plastic materials, semiconductors and telecommunications equipment all achieved gains on the export side of the ledger.

For the first six months of 2009, the U.S. trade deficit was running at an annual rate of $345.9 billion, less than half the $695.9 billion trade deficit recorded during all of 2008.

The improvement in the trade deficit was responsible for keeping the deep economic downturn in the United States from being even worse than it was, economists have noted.

The Commerce Department reported last month that the gross domestic product declined at a 1 percent annual rate during the second quarter, a significant improvement from the 6.4 percent plunge during the January-March period. The improving U.S. trade deficit actually contributed 2.6 percentage points to economic growth in the first quarter and 1.4 percentage points to growth in the second quarter, according to Commerce data.

“In the second half of the year, we would expect to see imports pick up more than exports,” said Nigel Gault, chief U.S. economist at IHS Global Insight. “As a result, the trade deficit should widen, and trade will become a drag on growth.”

Unlike the first half of the year, however, most economists are projecting growth of about 2 percent during the second half of 2009.

The politically sensitive trade deficit with China increased from $17.5 billion in May to $18.4 billion in June. For the first six months of 2009, however, the cumulative trade deficit with China declined 13.1 percent to $103.1 billion from $118.6 billion during the first six months of last year.

In June, the United States ran trade deficits of $4.5 billion with the European Union, $3.7 billion with Japan, $3.4 billion with Mexico, $1.8 billion with Venezuela and $1.6 billion with Canada.