June 2023 Sees US Trade Deficit Shrink as Imports Fall

US Trade Balance Highlights

• Deficit reduces to $65.5 billion in June.
• Goods deficit falls $2.8 billion to $88.2 billion.
• Services surplus slightly declines to $22.7 billion.

US Trade Balance Overview

The U.S. trade figures for June showcased a narrowing in the goods and services deficit, driven by both a decrease in imports and exports. This article delves into the specifics of these shifts, and offers a snapshot into what traders might anticipate in the short-term.

The U.S. monthly international trade deficit decreased in June 2023 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit decreased from $68.3 billion in May (revised) to $65.5 billion in June as imports decreased more than exports. The goods deficit decreased $2.8 billion in June to $88.2 billion. The services surplus decreased less than $0.1 billion in June to $22.7 billion.

Exports Trend

June exports amounted to $247.5 billion, a slight reduction by $0.3 billion from May’s figures. Delving into the specifics, exports of goods slid down by $0.2 billion to stand at $165.1 billion in June. Key areas that saw a downturn include industrial supplies and materials, notably crude oil which dipped by $0.5 billion. However, certain sectors such as capital goods reported a growth, with other industrial machinery and telecommunications equipment posting increments of $0.5 billion and $0.3 billion respectively. Furthermore, the export of services recorded a slight decline of $0.2 billion, totaling $82.3 billion in June.

Imports Overview

June’s import figures stood at $313.0 billion, marking a $3.1 billion decrease from May. The import of goods receded by $2.9 billion, finalizing at $253.3 billion. A significant drop was observed in capital goods, especially computers, which saw a decrease of $1.6 billion. The industrial supplies and materials sector also reported a decline, while there was a noticeable surge in the automotive segment, with passenger cars increasing by $1.7 billion. In contrast, the import of services slightly reduced by $0.2 billion, reaching $59.7 billion in June.

Supply and Demand Outlook

The three-month moving average indicated a widening of the goods and services deficit by $1.6 billion, settling at $69.4 billion for the period ending in June. This was the result of a decline in both average exports and imports by $3.6 billion and $1.9 billion, respectively. On a brighter note, year-to-date figures revealed a 22.3% shrinkage in the deficit when compared to the same timeframe in 2022.

Short-term Forecast

Considering the current trends, the outlook remains cautiously bearish for imports and exports. The real goods deficit diminished by 3.0%, suggesting that trade imbalances are likely to persist in the coming months. The consistent decline in both exports and imports reflects broader economic factors and will be crucial for traders to monitor closely.

Canada Trade Balance Highlights

• Merchandise exports fell by 2.2% in June.
• Trade deficit expanded to $3.7 billion.
• Real terms export saw an increase year-on-year.

Canada Trade Balance Overview