Trade deficit in the United States rose to a 10-month high during the month of June, followed by higher crude oil prices in the overseas market, coupled with a strong dollar against major trading currencies. Also, rising domestic demand boosted the import bill, taking a toll on export growth.
The US trade deficit rose 8.7 percent to USD44.5 billion in June, the broadest gap seen since Aug 2015, data released by the United States Commerce Department said Friday. Economists polled by Reuters had forecasted the trade gap widening to USD43.1 billion in June after a previously reported USD41.1 billion shortfall. When adjusted for inflation, the deficit rose to USD64.7 billion from USD60.9 billion in May.
US imports increased 1.9 percent in June to a seasonally adjusted USD227.7 billion the government said Friday. US exports edged up 0.3 percent to USD183.2 billion. The US exported less oil and fewer new autos in June. The trade gap with China advanced to USD29.8 billion and hit the highest level since last November. Higher purchases of electronic and other consumer goods were behind the increase. Exports to Canada, at USD24 billion, remained the strongest in a year.
The value of dollar rallied sharply against other major trading currencies between June 2014 and December 2015 that has weighed on the growth of the economy. However, the weakening of the currency on a trade-weighted basis this year, ebbed some of the drag on exports.
Moreover, the dollar has been regaining strength in the wake of Britain's June 23 vote to leave the European Union, and market participants say that could renew pressure on exports.
Meanwhile, the government in its snapshot of second-quarter gross domestic product published last week said that trade had contributed to almost two-tenths of a percentage point to the 1.2 percent annualized growth pace during the period.
