U.S. Trade Deficit Narrowed in June as Imports, Exports Rose -- Update
05 August 2020 - 6:40PM
Dow Jones News
By Paul Kiernan
WASHINGTON -- U.S. exports and imports both rose in June for the
first time in six months as the global economy began climbing out
of the recession caused by the coronavirus pandemic.
Exports from the U.S. rose 9.4% in June from May to $158.3
billion, the Commerce Department said in a report Wednesday.
Imports rose 4.7% to $208.9 billion. The deficit narrowed 7.5% to
$50.7 billion.
"While trade flows rebounded in June, they still remained way
off from where they were in February," said Shannon Seery, an
economist at Wells Fargo & Co. "The flows just declined so
dramatically in the prior three months."
The gains reflected a partial economic recovery in the U.S.,
Europe and elsewhere as lockdown restrictions intended to slow the
spread of the coronavirus were eased. But a resurgence of the virus
in the U.S. and some other countries suggests that a rebound in
economic growth and trade might be uneven.
Separate reports on Wednesday showed that business improved for
U.S. service industries in July.
The Institute for Supply Management's nonmanufacturing index of
activity in industries such as travel, health care, restaurants and
real estate rose to 58.1 from 57.1 in June.
IHS Markit said its U.S. services index edged up to 50 in July
from 47.9 a month earlier. Readings above 50 indicate expansion,
while a level below that shows a contraction. Fifteen of 18
industries tracked by the ISM index reported increased activity,
led by transportation, retailing and education.
Wednesday's Commerce Department report showed that the rise in
exports was fueled by a 14% jump in shipments of goods, which had
cratered in April and May. Exports of services rose 1%.
Consumer demand picked up in June as parts of the U.S. economy
reopened. Unemployment fell, and retail sales rose as consumers
bought more cars, clothing and electronics.
Those trends were reflected in a 10% rise in imports of consumer
goods. A 4.7% increase in imports of capital goods, such as
computers and semiconductors, pointed to stronger business
investment.
The automotive industry saw both imports and exports more than
double in June from May. Oliver Zipse, chief executive at German
auto maker BMW AG -- the largest exporter of U.S.-made vehicles in
recent years -- said in a Wednesday earnings release that the
company was "cautiously optimistic for the second half of the
year," while keeping an eye on fluctuations in regional demand.
Global trade tumbled in the first half of the year, as the
coronavirus pandemic and U.S.-China tensions caused multinationals
to reconsider globe-spanning supply chains. The World Trade
Organization's economists estimate that trade flows will fall by at
least 13% during 2020 as a whole, and possibly by much more.
Wednesday's data showed trade in services remained relatively
depressed compared with February levels. But most of the decline
stemmed from a sharp decline in international travel as tourists
stayed home and business travelers shifted to
videoconferencing.
"At the beginning of April, we saw the sharpest, deepest drop in
demand in history, far worse than 9/11 or the Great Recession or
any other stress-test scenario that anyone had modeled," United
Airlines Holdings Inc. Chief Executive Scott Kirby said in a
conference call last month.
"And near the end of the [second] quarter, just as optimism
about a recovery was beginning to build, we watched demand fade
once again as Covid-19 spiked in the Sun Belt," he added.
On the other hand, U.S. exports of intellectual property and
financial and business services have all declined only modestly
since the onset of the pandemic.
U.S. imports would have risen faster in June if not for a drop
in purchases of nonmonetary gold, mostly from Switzerland. Those
imports, which include gold bullion and bars but not official
money, soared in April and May, in what economists say likely
reflects investors' rush into asset classes they perceive to be
safe at times of market turmoil.
Gwynn Guilford and Ben Foldy contributed to this article.
Write to Paul Kiernan at paul.kiernan@wsj.com
(END) Dow Jones Newswires
August 05, 2020 13:25 ET (17:25 GMT)
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