US Q2 GDP tracking 3.0% after June trade data

The nominal US monthly trade deficit widened to $43.8bn in June, broadly in line with estimate $43.5bn and consensus expectations $43.0bn. The May deficit was revised narrower to $40.9bn (initial-$41.9bn) in the report, such that the trade balance widened about $3bn from May to June. Exports fell 0.1% m/m in nominal terms (previous-0.7% m/m) in June. However, real goods exports were unchanged on the month after having fallen 1.8% in May.

"Consumer goods exports were strong in June, but international demand for food and capital goods remained sluggish. Nominal imports were up 1.2% m/m (previous -0.5%), reflecting underlying strength in US demand, real goods imports were up 1.0% m/m (previous -0.9% m/m)", says Barclays.

Within this, food, automotive and consumer goods imports were all up solidly on the month. This led the real goods deficit to widen to $59.3bn in June from $57.6bn in May. The real petroleum deficit was reported at $8.8bn (previous-$8.3bn) as barrels of crude imported rose 10.7% m/m on the month.

The June trade balance was broadly in line with the Census Bureau's new advance report on international trade in goods that was first released last Thursday. This new report allows the BEA to incorporate actual data on goods trade into their advance estimate of GDP, effectively reducing the magnitude of revisions to GDP. Prior to this new report, the BEA was forced to make assumptions for trade data in the third month of the quarter as part of the advance estimate of GDP.

"The revised trade data for May show a smaller monthly deficit, implying that net trade likely added a bit more to GDP growth in Q2 than was initially estimated. This boosted our Q2 GDP tracking estimate very modestly, but after rounding it rose one-tenth to 3.0%", notes Barclays.