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WASHINGTON -- The U.S. trade deficit narrowed more than forecast in June to the lowest level since October 2009 as crude oil imports declined and American companies shipped more goods abroad.
The gap shrank 22.4 percent to $34.2 billion from a revised $44.1 billion in May that was smaller than previously estimated, the Commerce Department reported today in Washington. The median forecast in a Bloomberg survey of 72 economists called for a $43.5 billion deficit. Exports increased to an all- time high while imports fell to a three-month low.
The smaller trade bill, which reflected increased U.S. shipments of capital goods and petroleum, shows second-quarter growth was stronger than initially estimated. At the same time, a projected pickup in consumer and corporate demand indicates it may be difficult for the deficit to improve further.
“This is exceptionally good news,” said Millan Mulraine, director of U.S. rates research at TD Securities USA LLC in New York, whose forecast matched the Bloomberg survey median. “This could suggest GDP could be increased by as much as 1 percent.” Still, the level of the trade deficit is “unlikely to be sustained given the weak global growth.”
Stock-index futures held losses after the figures, with the contract on the Standard & Poor’s 500 Index expiring in September falling 0.2 percent to 1,699.7 at 9 a.m. in New York.
Bloomberg survey estimates ranged from trade deficits of $38 billion to $48.3 billion. The Commerce Department initially reported a $45 billion shortfall for May.
Exports increased 2.2 percent to $191.2 billion, boosted by sales of petroleum products and capital goods including engines and telecommunications equipment. American companies also provided foreign customers with a record value of services.
Imports declined 2.5 percent to $225.4 billion. Refineries in the U.S. imported less petroleum, and demand for consumer goods made overseas declined.
Increased domestic energy production is helping reduce America’s dependence of foreign crude oil. The import figures reflected 234.3 million barrels of oil, down from 240.5 million barrels in the prior month. The value of crude oil purchases decreased to $22.7 billion from $23.3 billion in the previous month.
The trade shortfall excluding petroleum shrank to a three- month low of $34.4 billion in June from $41.3 billion.
After eliminating the influence of prices, the trade deficit narrowed to $43.1 billion from $51.9 billion.
The economy expanded at a 1.7 percent annualized rate from April through June after a 1.1 percent pace in the first quarter, the Commerce Department said July 31.
Today’s report indicates that the 0.8 percentage point drag from trade, which was the most in almost three years, on second- quarter growth will be wiped away.
Consumer spending, which accounts for about 70 percent of the economy, grew at a 1.8 percent pace last quarter.
Economic growth is projected to average 2.5 percent at an annualize pace in the second half of the year, up from 1.4 percent in the first six months, according to the median forecast in a Bloomberg survey of 68 economists from July 5 to July 10.
Recent reports are pointing to improved second-half growth. U.S. service industries expanded in July at the fastest pace in five months, the Institute for Supply Management reported yesterday, with construction companies, retailers and financial firms reporting a pickup in business. That report followed data last week that showed manufacturing advanced at the fastest rate in more than two years.
Automakers are on pace for their best showing in six years as job gains boost confidence and consumers replace older vehicles. Cars and light trucks sold at a 15.6 million annualized rate in July and 15.9 million the prior month, the strongest back-to-back readings since late 2007, according to figures from Ward’s Automotive Group.
A stronger U.S. currency will make American shipments abroad more expensive. The Dollar Index, used by IntercontinentalExchange Inc. to track the greenback against currencies of six U.S. trading partners, has climbed 3.5 percent since reaching a low on Feb. 1, through yesterday.
The trade gap with China, the world’s second-biggest economy, narrowed to $26.6 billion from $27.9 billion, today’s report showed. The trade deficit with the European Union, Canada and Mexico also shrank.
For some companies such as Eaton Corp., which makes electrical equipment for buildings, demand is being restrained by federal budget cuts and weaker overseas markets. Dublin-based Eaton last week lowered its 2013 growth forecast for U.S. nonresidential construction to 2 percent to 3 percent from an earlier projection of 4 percent to 5 percent at the beginning of the year.
“We think the global economy is trending up slowly,” Sandy Cutler, chairman and chief executive officer at Eaton, said on an Aug. 2 conference call. “The U.S. is plodding. Europe may be at a bottom, but we see little prospect for a lot of vigor in a prospective recovery at this point. We do not see a major catalyst for a change in the second half of this year.”
Growth, Cutler said, is concentrated more “on the consumer side, not the industrial side.”