Trade Deficit Narrowed by $2.8 Billion to $65.5 Billion in June

Washington, DC, August 8, 2023-The goods and services deficit was $65.5 billion in June, down $2.8 billion from $68.3 billion in May, revised, the U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced.

June exports were $247.5 billion, $0.3 billion less than May exports. June imports were $313.0 billion, $3.1 billion less than May imports.

The June decrease in the goods and services deficit reflected a decrease in the goods deficit of $2.8 billion to $88.2 billion and a decrease in the services surplus of less than $0.1 billion to $22.7 billion.

Year-to-date, the goods and services deficit decreased $117.7 billion, or 22.3%, from the same period in 2022. Exports increased $37.6 billion or 2.5%. Imports decreased $80.1 billion or 4.0%.

According to the Wall Street Journal, “China’s exports to the rest of the world tumbled in July, adding to the challenges for the world’s second- largest economy and offering fresh evidence that a drying up of Western demand is hurting Beijing’s attempts to rekindle growth.

“After a short-lived rebound in the spring, goods exports from China resumed a long-term slide that dates to October last year, when consumers in Western developed countries began shifting their spending away from buying furniture and electronic gadgets, and diverted it toward services such as entertainment and dining out.

“Worsening geopolitical tensions between Beijing and the U.S.-led West have prompted some Western manufacturers to reduce their reliance on China’s supply chain, which in turn is expected to erode trade ties between the two sides.

“Overseas shipments from China slumped 14.5% in July from a year earlier, the steepest year-over-year decline since February 2020, in the earliest days of the Covid-19 pandemic, data released Tuesday by China’s General Administration of Customs showed deepening troubles for China’s economy. The country’s beleaguered housing market showed new signs of distress this week. Youth unemployment has hit record highs. And the latest data show China is on the brink of falling into deflation, a scenario that many fear could drag the economy into a downward spiral.

“Asia’s other export powerhouses are also grappling with crumbling global trade demand. South Korea’s exports fell 16.5% year over year in July, widening from a 6% drop in June. Purchasing managers indexes showed the manufacturing sectors in five out of seven Asian countries, including China and Vietnam, were in contraction last month, pointing to weak underlying demand from the West.

“Taken together, sluggish figures in China and other parts of Asia suggest that the global growth slowdown is starting to bite harder.

“Economists predict that growth headwinds in the U.S. and Europe, in part the result of persistent inflationary pressures, will continue to curb consumer spending and business borrowing for the rest of the year as the threat of a recession lingers.”