US ECONOMIC growth looks set to be revised upwards after the country’s trade deficit narrowed to a three-and-a-half-year low.
The Commerce Department said yesterday that the trade gap fell 22.4 per cent in June to $34.2 billion (£22.3bn), the smallest it has been since October 2009. The percentage decline was the largest since February 2009. May’s shortfall was also revised, down to $44.1bn from $45bn.
Economists, who had been expecting only a small improvement in June, said the trade figures meant the overall output of the world’s largest economy was probably understated by early estimates. Tim Quinlan, an economist at Wells Fargo Securities, said that, all other things being equal, official figures should be revised up by 0.8 percentage points, taking growth to 2.5 per cent on an annualised basis.
The revision would be welcome news after belt-tightening in Washington weighed on the US economy in the first half of the year, sparking fears it could stall the global recovery. The narrowing in the deficit was driven by both a decline in imports and export growth.
US imports of goods and services fell 2.5 per cent to $225.4bn in June, partly reflecting the country’s increasing self-reliance in petrol thanks to its booming unconventional oil and gas industry. However, fewer industrial supplies and materials were imported.
Meanwhile, exports jumped 2.2 per cent to a record $191.2bn, with food, industrial supplies, capital goods and consumer goods all rising.