US international trade balance for June $-73.1 billion versus $-72.5 billion

• Prior month $-75.1 billion revised to $75.0 billion
• Good trade balance $-96.56 billion versus $-96.84 billion preliminary and $-99.37 billion last month
• Services surplus $24.2 billion

Details:

• Exports -1.5% versus -0.5% last month
• Imports +0.6% versus -0.3% last month
• Capital goods imports $80.18 billion versus $77.95 billion last month
• Total exports $265.94 billion versus $262.01 billion last month
• Total imports $339.05 billion versus $337.01 billion last month.
• US China June trade deficit $-22.80 billion versus a trade deficit of $-23.98 billion

A larger trade deficit means that the value of imports exceeds the value of exports. Since GDP is calculated as the sum of consumption, investment, government spending, and net exports (exports minus imports), a larger trade deficit (higher imports and/or lower exports) directly reduces the net exports component, thereby reducing GDP.

In the 2Q advanced GDP, the trade subtracted 0.72%. The June number today is part of the revision for the 2Q. The question is what did the Commerce Department plug in for Q2. We know this is a larger deficit so it may be more negative in the next cut of GDP,.

This article was written by Greg Michalowski at www.forexlive.com.